Development of Natural Resources (Gold, Diamonds, Timber

It is very important to discuss this topic on major natural resources (coal, iron-ore, tin and columbine, limestone, lead and zinc) knowing very well that they take important place in the economy of this nation. Senior school examinations may also feature questions on this topic because of its vital role. Hence, it is necessary to study the development of the major natural resources and their contributions (negative and positive) to WestAfrican economies,

Development of Natural Resources (Gold, Diamonds, Timber, etc

Natural resources are things that are not made by man, but exist in the universe, found under
or on the ground and sea, which are explored and used by a nation. The different types of
natural resources which are:

(i) Coal, Limestone, Lead and Zinc

These are sedimentary rock minerals. Coal was found in Enugu and Benue State (Okabo) It is a major source of fuel used in the olden day railway locomotives and the home, Limestone is an essential raw material for cement manufacturing. It was found in Ogun  (Ewekoro and Sagamu), Edo State (Ulcpi

• Cross River State (Calabar, Anambra State

Nkalagu), Benue and Sokoto State. Lead and zinc are used in industries locally, they are
found in Ebonyi State (Abakaliki).

•  Iron-Ore, Tin and Columbite

These are basement rock minerals. Iron-ore is the basis for iron and steel complex. It was found in Itakpe (Kogi State) and Aladja (Delta State) and fed to iron and steel complex in Ajaokuta (Kogi State). Tin and Columbite occur naturally together. Tin is used in the canning industry for coating while columbite is used in the manufacturing of heat resis steel used in jet engines. They are found near Jos (Plateau State). The advent of the natural resources had both positive and negative effects.
IU Iithe Contributions of Natural Resources to Nigerian Economy.

(ii’ Technology Trans/r: Foreign technology is introduced through the participation of foreign firms. Extraction of these minerals involves foreign skilled manpower and
entrepreneurship,
( Acquisition of Skills: Exploration and extraction of the natural resources enforce it
on people to acquire various kinds of skills and knowledge.
tam Pirn’ision of Raw Materials: Gasoline, fuel oil, kerosene and cooking gas are used
as fuel for industrial and domestic uses. Limestone is used by cement industries and
iron ore is used by iron and steel industries.
1w Increase in Per capita Income: There has been an increase in salaries and fringe
benefits witnessed and experienced by public servants, with the increase in
production of petroleum and other natural resources.
Generation of Government Revenue: Government derives revenue from the natural
resources through royalties and profit tax. Mining companies paid taxes including
export and import duties on minerals.
i Pivvisiorz f Foreign Exchange Earnings: Exportation of the natural mineral
resources such as coal, limestone and petroleum, etc. provides foreign exchange for
the economy. Petroleum in particular is the largest source of foreign exchange in the
Nigerian economy.
Imn Improvement of Educational Facilities: Revenue from the resources is used to
provide ftmds for better amenities of educational institutions.
il Eslablishment of Industries: Major industrial projects are embarked upon, such as
the iron and steel complex, oil refineries, vehicle assembly plants, cement industries
and breweries.
Tertiary Production: Mineral resources helped to boom the activities of banking,
inxurance and commerce.
tTJ Development of Jnfrastructure. Infrastructural facilities like roads, electricity,
telephone, pipe-borne water etc., were developed due to the presence of mineral
resources in different areas.
of Employment: There is direct and indirect generation of employment at
the prospecting mining, refining, processing and distribution stages of the natural
resources.
ru Growth Opportunities: The discovery areas of the resources like Enugu, Jos, Warn,
etc. have witnessed economic growth due to the presence of the minerals.
m) Production of Geological Maps: The discovery and mining of the resources in the
country has led to the production of certain geological maps.
th’a lrnpmvement of Balance of Payment: The rapid development of the oil industry
particularly in the I 970s has improved Nigerian’s balance of payment.

Contributions Of Agriculture To Economic

The agricultural sector of the Nigerian economy has made important contributions to economic development. Some of its vital contributions are stated below:

• Major Source of Food Supply

The agricultural sector has been the major supplier of foodstuffs to the populace. In the I 950s and I 960s, Nigeria was self sufficient iii provision of foodstuffs, but in recent times, this is not the case. All the more reason why the government has been laying agricultural production through its various programmes like ‘Operation Feed the ‘Green Revolution’, and ‘Agricultural Development Programmes’ established in all states.

• Major Foreign Exchange Earner and Conservator

It earns the country foreign exchange from its export of agricultural products like cocoa rubber, groundnut, palm kernel, etc. Likewise, it conserves foreign exchange since we not use our hard earned foreign exchange to purchase some goods from abroad and otheT! foodstuffs that it produces too (like yam and cassava tuber, maize, guinea corn, wheat millet, etc.).

• Source of Savings and Capital Accumulation

Agricultural sector in Nigeria and West Africa at large provides savings and investible surplus fund for capital accumulation from its large revenue earnings. In recent timej. individual farmers have been able to accumulate enough money to purchase modern farn machineries and equipments.

• Major Source of Raw Materials for Industries

The agricultural sector produces over 70% of raw materials of food processing industriousness Nigeria. For instance, it provides palm kernels for manufacturers of palm oil and groundnut oil, likewise it produces cocoa for local manufacturers of cocoa butter and beverages. produces tobacco leaves for cigarette products producers.

• Major Market for Agricultural Tools/Machinery

Agricultural sector is a market for agricultural tools, machinery and other farming input produced by the industrial sector. The agricultural sector consumes the various tractor and other agricultural tools and machines produced in the industries. Likewise, it buys the various chemicals like herbicides, fumigants, pesticides and fertilizers produced by industrial sector.

• financier of Industrial Growth and Development

finances industrial growth and development by patronizing its products and services; and at ie same time by re-directing its investible surplus into industrial ventures. Individual rmers and corporate farming bodies re-invest in industries. For example, Amoo-Sanders Hatchery Limited now invest in production of feed mills.

• Providers of Employment Opportunities

provides employment for more than 60% of the Nigerian labour force. as well transfers excess manpower to non-agricultural sector as a result of the use of nadern agricultural machinery.


Agriculture can be categorized into three basic categories:

(I) Crop production;
(ii) Livestock production; and
(lii) Mixed farming.
Systems of agriculture include the following:
(I) Self subsistence/peasant agricultural system;
(ii) Plantation farming;
(iii) Mechanised farming;
(iv) Commercial farming;
(v) State farming;
(vi) School farming; and
(vii) Cooperative farming.
Contribution of agriculture to economic development includes:
(i) major source of food supply;
(ii) major foreign exchange earner and conservation;
(iii) source of savings and capital accumulation;
(iv) major source of raw materials for industries;
(v) major market for agricultural tools/machineries;
(vi) financier of industrial growth and development
(vii) provider of employment opportunities;
(viii) it increases rural net income;
(ix) tourist attraction;
(x) provides means of transport.

Nature Of our Economics Today

Nigeria is a middle income, mixed economy and emerging market, with expansionary service, communications, and entertainment sectors. She is ranked 30th in the world terms of GDP as of 2011, and its emergent, though currently unperformed, manufacturing sector is the third-largest on the continent, producing a large proportion goods and services for the West African sub-region. Although much has been made of its status as a major exporter of oil, Nig produces only about 2.7% of the world’s supply. To put oil revenues in perspective: a estimated export rate with a projected sales price of $65 per barrel in 2011, anticipated revenue from petroleum is about $52.2 billion. This account for less than I of official GDP figures (and drops to 10% when the informal economy is included in calculations). Therefore, though the petroleum sector is important, it remains in facts part of the country’s overall vibrant and diversified economy. The largely subsist agricultural sector has not kept up with rapid population growth, and Nigeria, once  net exporter of food, now imports a large quantity of its food products.

Overview of the Nigerian

Nigeria’s economy is struggling to use the country’s vast wealth in petroleum resource displace the crushing poverty that affects about 57% of its population. Economists of the coexistence of vast wealth in natural resources and extreme personal developing countries like Nigeria as the “resource curse”. Although “resource more widely understood to mean an abundance of natural resources which fuels offer corruption resulting in a violent competition for the resource by the citizens of the
Nigeria’s exports of oil and natural gas—at time of peak prices—have enabled

A longer-term economic development programmer is the United Nations (UN) — censored National Millennium Goals for Nigeria. Under the programme which covers the yrs from 2000 to 2015. Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, nd international development cooperation. In an update released in 2004, the UN found that Nigeria was making progress advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing thud arid maternal mortality, and combating diseases such as human immunodeficiency reacquired immune deficiency syndrome (HIV/AIDS) and malaria. A prerequisite for achieving many of these worthwhile objectives is curtailing corruption.

Nigeria ranks twenty fifth worldwide and first in Africa in farm output.

Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, neglect and the lack of basic infrastructure. Still, the sector accounts for over 26.8% of GDP and two-thirds of employment. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, and palm oil. Cocoa production, motIy from obsolete varieties and overage trees, is stagnant at around 180,000 tons annually; 25 years ago it was 300,00 tons. An even more dramatic decline in groundnut and palm oil production also has taken place. Nigeria was once the biggest poultry producer in Africa, corporate poultry and other sectors.

Fisheries are poorly managed. Most critical for the country’s future, Nigeria’s land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.

Agricultural products include cassava (tapioca), corn, cocoa, millet, palm oil, peanuts, rice, rubber sorghum, and yams. The agricultural sector suffers from extremely low productivity, reflecting reliance on antiquated methods. Although overall agricultural production rose by 28% during the 1 990s, per capita output rose by only 8.5% during the same decade. Agriculture has failed to keep pace with Nigeria’s rapid population growth, so that the country, which once exported food, now relies on imports to sustain itself.



Nigeria ranks 44th worldwide and third in Africa in factory output.

The oil boom of the I 970s led Nigeria to neglect its strong agricultural and manufacturing bases in favour of an unhealthy dependence on crude oil. In 2000, oil and exports accounted for more than 98% of export earnings and about 83% of federal government revenue. New oil wealth, and decline of other economic sectors, led to massive migration to the cities and widespread poverty I 980s followed. By 2000, per capital income had plunged to about one-quarter of its mid- I 970s high, below the i at independence. Along with the endemic malaise of Nigeria’s non-oil sectors, the economy continues to witness massive growth of “informal sector” economic activities, estimated by some to be as high as 75% of the total economy.

The United Kingdom is Nigeria’s largest trading partner followed by the United States. Although the trade balance overwhelmingly favours Nigeria, thanks to oil exports, a large portion of U.S. exports to Nigeria is believed to enter the country outside of the Nigeria government’s official statistics, due to importers seeking to avoid Nigeria’s excessive tariffs.

Oil dependency, and the attraction to the generation of great wealth through government contracts, led to other economic distortions. The country’s high propensity to import means roughly 80% of government expenditures is recycled into foreign exchange. Cheap consumer imports, resulting from a chronically overvalued Naira, coupled witl excessively high domestic production costs due in part to erratic electricity and fuel supply pushed down utilization of industrial capacity to less than 30%. Many more Nigeria factor would have closed except for relatively low labour costs (10%— 15%). Domesuc manufacturers, especially pharmaceuticals and textiles, have lost their ability to compete traditional regional markets. However, there are signs that some manufacturers have begun to improve competitiveness.

Nigeria ranks 63rd worldwide and fifth in Africa services’ output. Low power and telecom has crippled the growth of this sector.

- Since undergoing severe distress in the mid- I 990s, Nigeria’s banking sector has ed significant growth over the last few years as new banks enter the financial market.

monetary policies implemented by the Central Bank of Nigeria to absorb excess Naira liquidity in the economy has made life more difficult for banks, some of whom engage
currency arbitrage (round-tippig) activities that generally fall outside legal banking mechanisms. Private sector-led economic growth remains stymied by the high cost of doing biness In Nigeria, including the need to duplicate essential infrastructure, the threat of [dassociated need for security counter measures, the lack of effective due process, dnon-transparent economic decision making, especially in government contracting. As of ZT, 29% of Nigerians in urban areas did not own bank accounts. While corrupt practices endemic, they are generally less flagrant than during military rule, and there are signs of nvement. Meanwhile, since 1999 the Nigerian Stock Exchange has enjoyed strong, although equity as a means to foster corporate growth remains underutilized ia’s private sector.

Current Economics Plan Need And transformation strategy

Without economic planning a country is planning for failure. The importance of
institutionalizing planning at every level can not be over emphasized. Planning is defamed as
the formulation and articulation of economic policies that would help the effective
allocation of resources to all the sectors of the economy over a period of time. in this chapter,
we shall discuss current economic plans like the National Economic Empowerment and
Development Strategy (NEEDS), Vision 2020 and the Millennium Development Goals (MDGs).

National Economic Empowerment and Development Strategy (NEEDS)

NEEDS is Nigeria’s home grown Poverty Reduction Strategy Paper (PRSP). NEEDS is a medium-term strategy paper (2003—2007), but which derives from the country’s long-term goal of poverty reduction, wealth creation, employment generation and value re-orientation. NEEDS is a nationally coordinated framework of action in close collaboration with the state and local governments (with their State Economic Empowerment and Development Strategy, SEEDS) and other stakeholders, in order to make Nigeria achieve the Millennium Development Goals (MDGs).

The previous rolling plan concentrated on ill-articulated large portfolio of projects, which is contrary to NEEDS. Funds for investment came from federal and state governments as well as private sectors.
In comparison with some of the previous/earlier plans, NEEDS is different in the sense that, all Nigerians and stakeholders are given a chance to contribute to the plan that affect their lives. It is also the first time both Federal Government and state governments under NEEDS and SEEDS respectively are coordinating a planning framework with agreed common priority to agriculture, small and medium enterprises (SMEs), infrastructure, etc. NEEDS shows that federal and state government must work together for the advancement or development of Nigeria’s economy.

National Economic Empowerment Development Strategy: Objectives and Priorities

The National Economic Empowerment Development Strategy (NEEDS) is derived from the urgent requirement for value re-orientation. Therefore, the bedrock of NEEDS is its vision of a Nigeria with a new set of values and principles, which will facilitate the achievements of national goals of wealth creation, employment generation and poverty reduction.

Since the achievement of these national goals depends on a sound economic framework, NEEDS has fashioned a reform agenda with emphasis on strengthening the economic environment, and strengthening the growth agents within the system.

The specific reform programmes in NEEDS include:

• public sector reforms
• privatization and liberalization
• good governance
• transparency and anti-corruption; as well as service delivery by government agencies.

NEEDS also specifies private sector reforms which will address issues such as security and rule of law; infrastructure; finance; sectoral strategies; privatization and liberalization; and trade and regional integration.

It also entails a Human Development Agenda or Social Charter, which will focus on
health, education, integrated rural development, housing development, employment and youth development, safety nets, as well as geopolitical balance.

Finally, NEEDS specifies its financial and plan implementation strategies. Of course, whatever funds are spent on this performance would be money well spent. Though, NEEDS is a medium-term economic reform programme, its formulation has been made consistent with both short-term realities and long-term imperatives, that derive from the country’s long-term goals of poverty reduction, wealth creation, employment generation and value reorientation.

NEEDS is becoming a platform for both the federal and state governments to cooperate more closely. The federal government under NEEDS, and the state government under NEEDS, will coordinate a planning framework, with agreed common priorities in agriculture, public finance and public sector forms, with emphasis on the social sector.

NEEDS is therefore fashioning for Nigeria, a common ground for all economic agents
to interplay, in a healthy and sustainable manner. The objectives are mainly threefold:

• poverty reduction
• employment generation
• wealth creation

NEEDS’ intermediate Goals

The immediate goals of NEEDS is to redefine the role of government in the economy, by emphasizing the participation of government in the running of businesses. This is in line with the global view that government has no business running. It is the responsibility of government to create an enabling or conducive environment for the private sector to thrive, through legislation, tax regimes and other incentives.

There is synergy as well as coherence between federal and state reforms, for the first time, in a very long time. This has ensured purposefulness, focus and objectivity. The trend today is a far cry from past experience, by these two levels of government, which had sometimes worked at cross-purposes.
The commitment of government to undertake fundamental reforms, and see them through, has left nobody in doubt. The reforms are based on selected programmers. The question of biting more than can chewed, with all the attendant problems, is therefore, avoided. The phased programme of the reforms ensures that the shock to the system is not massive at any given point.

Vision 20:20 is an articulation of the long-term intent to launch Nigeria back to the path of sustained social and economic progress and accelerate the emergence of a truly prosperous and united Nigeria. Recognising the enormous human and natural endowments of the nation, the blueprint is an expression of Nigeria’s intent to improve the living standards of her citizens and place the country among the Top 20 economies in the world with a minimum GDP of $900 billion and a per capita income of no less than $4000 per aimunt

Nigeria’s targets for 2020 are based on a dynamic comparative analysis of the country’s potential growth rate and economic structure via-a-vis those of other Top 40 economies in the world. This implies that the Nigerian economy must grow at an average of 13.8% during the time horizon, driven by the agricultural and industrial sectors over the medium term while a transition to a service-based economy is envisaged from 2018.

Fundamental to the vision are two broad objectives — optimizing human and natural resources to achieve rapid economic growth, and translating that growth into equitable social development for all citizens. These aspirations are defined across four dimensions:

Fundamental to the vision are two broad objectives — optimizing human and natural resources to achieve rapid economic growth, and translating that growth into equitable social development for all citizens. These aspirations are defined across four dimensions:

(1) Social Dimensions:A peaceful, equitable, harmonious adjust society, where every citizen has a strong sense of national identity and citizens are supported by an educational and healthcare system that caters for all, and sustains a life expectancy of not less than 70 years.

(ii) Economic Dimension: A globally competitive economy that is resilent and diversified with a globally competitive manufacturing sector that is tightly integrated

and contributes no less than 25% to Gross Domestic Product.

(‘iii,) Institutional Dimension: A stable and functional democracy where t:he rights of the citizens to determine their leaders are guaranteed, and adequate infrastructure exists to

support a market-friendly and globally competitive business environment.

(iv) Environmental Dimension: A level of environmental consciousness that enables arid supports sustainable management of the nation’s God-given natural endowments to ensure their preservation for the benefit of present and future generations.Why Vision 20:20?

The need for a holistic transformation of the Nigerian state has assumed an urgent and critical dimension in the course of the last two decades. Notable is the increasing relevance of Nigeria as a leading emerging market albeit with under-utilsed potential. With the return to democratic rule in 1999, and the gradual re-building of civil institutions and a vibrant market economy, the feasibility of Nigeria assuming a key position as a global economic power and a catalytic hub for development in Africa has become more profound. Using an all-inclusive consultative process involving over 1000 of the nation’s leading professionals and thinkers, Vision 20:2020 is an authentic blueprint by the Nigerian people to set for themselves a stretch target to transform the lives of the average Nigerian, and by implication the Nigerian economy.

The economic transformation strategy for Nigeria is anchored upon three thrust:

1. Creating the platform for success by urgently and immediately addressing the most debilitating constraints to Nigeria’s growth and competitiveness;

2. Forging ahead with diligence and focus in developing the fabric of the envisioned economy by;

(a) Aggressively pursuing a structural transformation from a mono-product economy to a diversified, industrialized economy;

(b) Investing to transform the Nigerian people into catalysts for growth and national renewal, and a lasting source of comparative advantage; and

(c) Investing to create an environment that enables the co-existence of growth and development on an enduring and sustainable basis.

3. Developing and deepening the capability of government to consistently translate national strategic intent into action and results by instituting evidence-based decision

making in Nigeria’s public policy space.

Merchant Bank primarily concerned with designing

These organisations; Merchant Banks are primarily concerned with designing and under. Siting new securities, acceptance of trade bills. Merchant banks (Acceptance i-uses) deal in stock exchange securities and help companies to arrange for long-term capital equity. Furthermore, merchant banks serve as general financial advisers to their industrial customers and institutions that solicit their financial services.

In Nigeria, the consolidation of banks in 2004 led to the re-emergence of Universal Banks whereby they can perform both commercial and merchant banking.

Some of the Merchant Banks that operated in Nigeria in the past includes: Abacuses Merchant Bank Nigeria Plc, ABC Merchant Bank Nigeria Pie, Alpha Merchant Bank Plc, First City Merchant Bank Nigeria Plc, First Interstate Merchant Bank Nigeria Pie, international Merchant Bank Plc, NAL Merchant Bank Nigeria Plc. In Ghana, we have the National Finance and Merchant Bank of Ghana.


Insurance Companies

Insurance companies offer financial compensation as protection against the risks of accident, theft, death, fire, flood and other disasters. Regular payment of money called premiums is made by insurance policy holders who are prospective beneficiaries of such funds. The premium accumulated from insurance policy holders or customers are pooled together and invested by the insurance company in short-term and long-term securities especially on the capital market.


 The Capital ‘i-key

It is a medium whereby medium term and long-term loans are sold and bought. Issued stocks, shares, debentures and bonds are some of the long and medium term securities being traded on the capital market.
The major institutions that participate on the capital market are the Central Bank, Securities and Exchange Commission which provides guidelines for activities on the Nigerian Stock Exchange which is the pivotal institution in the capital market. Other participating institutions ace stock-booking firms, building societies, insurance companies, development banks, finance corporations, merchant banks, savings banks, investment trusts and others.


Agencies involved in the capital Market

1. Central Bank
2. Securities and Exchange Commission
3. Stock-booking Firms
4, Building Societies
5. Insurance Companies
6. Development Banks
7. Saving Banks
8. Social Security and Provident Fund

The Lagos Stock Exchange (Securities and Exchange Commission

It was established in 1960. Presently, it has branches  Lagos, Port Courtyard, Kadun Ibadan, Abuja, Onitsha. The stock exchange run by the Nigerian Stock Exchange Coincide which stipulates the standard of business conduct (or conduct of dealings), membership settlement of disputes, and inspection of new quotations.Traditionally, we have brokers and jobbers or buyers and sellers respectively in the Stock Exchange Market. Brokers act as agents for firms or individual buyers or seller of securities. They purchase or sell stocks and shares (and other securities) on behalf of their
clients. They charge commission for performing this service.


Jobbers deal in particular types of shares and stocks. He is like a wholesaler in the stock,
market. Whenever jobber is transacting business with brokers (who are like retailers on the
stock exchange), he quotes two prices the selling price and the buying price for the shares
The difference between his buying price and selling price is called the Jobbers turn or pro&
However on the Nigerian Stock Exchange, we have only brokers who are dealing
members on the Stock Exchange. There are no jobbers on the Nigerian Stock Exchange n
because the trading activities on the stock exchange are limited due to relatively
numbers of shares on the Stock Exchange.

Nevertheless, the number of shares on the stock exchange has increased gradually especially due to the implementation of the Nigerian Enterprises Promotion Decree of 1972 and 1974 and the recent privatization and commercialization of some government pastorals and the debt-equity swap scheme of the Federal Government’s Structural,Adjustment Programmer (SAP).


Members of the public buy shares on the basis of two major motives:

(1) To invest their money in specific shares or securities. Those with such motivation
end up buying shares and holding on to them as a source of regular income.
(ii) To speculate and buy shares purposely so as to study fluctuations in prices of stocks
and shares and buy in periods when share prices are low to resell when prices are at
a very high level. Consequently, they aim to take advantage of price fluctuation
the Stock Exchange Market.. Speculators are thus classified.
(a) Bulls: Are speculators who rush to buy shares with the expectation offprint
increase in the future.
(b) Bears: Are speculators who sell their shares in the hope that prices will falL
They aim at utilizing such opportunity to make quick profit. -
(c) Stags: Are those who purchase newly-issued shares hoping to resell them
when price rises.

Building Societies/Mortgage 

Mortgage banks (or building societies) accept deposits from customers and later lend money.
to these customers for the purpose of procuring land or building their own houses. They
therefore aid people to save with a view of procuring their own houses or landed property.

 In Nigeria, we have the Nigerian Building Society, several state owned Housing Corporations, a government funded bank, Federal Mortgage Bank of  Nigeria Plc, as typical examples of Mortgage Banks/Building Societies. In Ghana, we have a similar body called First Ghana Building Society. In July 1991, ten new privately-owned mortgage banks have been licensed to operate in Nigeria and many more since then.

Social Security and Provident Fund

Social Security and Provident Fund organisations provide compensation to workers during illness, unemployment, or retirement. To achieve this goal, the body collects regular contributions from workers and their employers. Such fund is invested in government long- tern] securities. A typical example of this nature was the National Provident Fund in Nigeria. With the Pension Reforms started in 2004, some financial institutions called Pensions Fund Administrators (PFA) were established to collect contributions from workers and their employers and invest such on behalf of the workers so as to pay them their retirement benefits as at when due. Some of such PFA are: IBTC Pensions Fund Administrators, Lead way Pensions Fund Administrators, Crusaders Pensions Fund Administrators, etc.

Savings Bank

Savings banks are specialized institutions that provide savings account services. The Nigerian Post Office Savings Bank (now known as Federal Savings Bank) and Cooperative Thrift and Credit Societies are examples of Savings Banks. The deposits are made regularly in small units and can be withdrawn whenever required. Some of these funds are usually invested in government securities and bonds (e.g. treasury bills).

Development Banks

These are banks that provide short-term and long-term loans for specific sectors of the economy. These banks are funded and owned by the government. The aim is to accelerate the growth and development over time in the sectors under the jurisdiction of such banks. In Nigeria, we have the Nigeria Agricultural and Cooperative Bank, Nigerian Bank for commerce and Industry, Nigerian Industrial Development Bank while Sierra Leone has the Sierra Leone National Development Bank. Ghana’s National Investment Bank serves the purpose of a Development Bank. The Gambia Commercial and Development Bank serve the dual role of commercial and development bank.

Summary

In this chapter, we have discussed the following: Financial institutions refer to organisations and arrangements concerned with lending, borrowing, investing and managing money or funds. They are sometimes referred to as financial markets. These financial institutions use financial instruments in carrying out their different activities.
These include: The promissory notes, bill of exchange, call money funds, bonds, stocks and shares, cheques.

Agencies That Regulate Finance Of Market In Our Country

Financial markets can be broadly categorized into two: the money and capital markets.The working of the two markets ensure that the economy of a nation is well run and ii
have good returns on their investment. In this chapter, we shall identify the rej agencies in the markets, the tools they use in regulating the financial system.

The money market is an arrangement for the exchange of short term securities. The mon market is used by institutions or individuals who wish to borrow on a short term basis or haw money to lend to the financial system on a short-term basis. The some instruments employ in the money market include treasury bills, commercial bills, money at call and bills of exchange, etc.

Instrument or Both Used in The Money Market

1. Bill of exchange

This is as well referred to as a trade bill or commercial paper. The bill of exchange is a downturn showing evidence of an outstanding loan between two parties. When the creditor (or the exporter) draws up the bill of exchange on the debtor (or importer); then it must be accepted consented to by the debtor (or importer) before it would have any value. If this bill exchange is drawn on a bank or an acceptance house (often referred to as drawer); this bill can be sold’ the money market for a small discount (this is called discounting bill of exchange).

The date of payment (or maturity) of the amount stated on the bill of exchange should not exceed 90 days (or 3 months). Often times, they are written out in a set of three. There exist both inland bills of exchange, drawn and payable within a country, and foreign hills (these bills are either drawn within the country and payable abroad or drawn abroad. and payable within the country).

2. Moneylender Funds

This is the excess cash Which commercial banks deposit with the. Central Bank or lend to financial institutions on short term basis. This financial instrument has no fixed date Dravidian or-repayment; it can be recalled by lending banks whenever required.

3. .Treas Bills

Lie Central Bank has part of the control over Commercial Bank converts short-term loans it bills) to government bonds to reduce the lending ability of Commercial Banks. A say bill enables the government, through the Central Bank, to borrow money from the samey market on short-term basis.

Agencies Involved in the Money Market Central Bank

i Commercial Banks
iii Acceptance Houses (Merchant Banks) [l Financial Houses
lv) Discount Houses
vi) Insurance Companies
(ii Central Bank

The Central Bank is the apex of the financial system. Apart from the government, it is the most important monetary and financial regulatory body within the country. Each independent country has its own Central Bank; for instance, Nigeria has the Central Bank of Nigeria.

The Central Bank is owned solely by the government of the country. Its Board of Directors and Governor are appointed by the government. The Central Bank serves majorly as a government instrument for controlling the country’s economy (especially the monetary and financial aspects of the economy). Therefore, the government of the country seeks to substantially influence the activities of the Central Bank.

Before political independence, all the English speaking West African countries have the Vest African Currency Board (WACB) acting as Central Bank. West African Currency Board has its head office in London. Since its functions were majorly the printing of and inane of currency notes, it was more or less a currency issuing financial house. As each of the!English-speaking West African countries gained political independence, it established a Central Bank of its own. Consequently, Ghana established a Central Bank in 1957; Nigeria in 1959; Sierra Leone in 1964 and Gambia in 1971.

These Central Banks perform the nonspecializing services and functions:

(1) Issuance of currency
(11) Serve as banker to the Government
liii) Serve as banker to Commercial Banks
(iv) Manages the country’s foreign monetary matters
(v) Serve as banker to discount houses

(vi) Facilitate socio-economic development

(vii) Implement Government’s monetary and financial policies

2. Commercial Banks

Like Central banks, commercial banks are financial institutions organised in form of limited liability companies or cooperative business units. Commercial banks are either owned by individuals, groups of individuals or corporate bodies or governments. The major economic activities of commercial banks revolve around the acceptance of money deposits for safe-keeping (or indigestible fund) and the granting of loans and advances that bear fixes rate of interest to their customers (or investors).

Commercial bank business originated from the activities of London Goldsmiths that accepted deposits from customers and lent out part of the money deposited with interest. In West Africa, commercial banking began in 1894 when the Bank of West Africa owned by Lloyd Standard Bank of South Africa and West Minster was established. Later in 1 926 Barclays Bank was instituted. These banks conducted commercial banking services on the West African shores with branches all over West Africa and close links with their foreign headquarters in Britain.

Indigenous commercial banking activities started in Nigeria when the industrial and commercial bank was established in the late I 900s. Economic mismanagement, accounting irregularities coupled with highly competitive nature of the banking environment brought about the demise of this indigenous bank in the 1930s. Three years later (1933); Dr. Maja. Dr. Daugherty and Dr. Subair founded the National Bank. This bank lived and grew until I 961 when the Western Region Government of Nigeria assumed control of it and changed its name to National Bank of Nigeria. In 1937, the Arab Bank (now known as African Continental Bank) was established too.

It is noteworthy that commercial banking was not regulated by government until unfortunate disquieting experiences of bank failures were recorded in the banking Indus. In 1952, the first Banking Ordinance was passed to regulate banking business. Thc commercial banking business in Nigeria today is less regulated than before and there exist many indigenous commercial banking institutions in the country too.

Functions of commercial Banks

The functions of commercial banks can be grouped into six major categories. Each is identified as follows:

• The safe-keeping (or acceptance) of customers’ money
• The transfer of money
• Provision of loans, advances and overdrafts
• Promotion of economic development

Lesson For World Economics System

Since the 1990’s crisis most of the Tiger economies have become financially and now have stronger companies and regulatory frameworks in place to prevent another similar crisis. However, this has shown many Asian governments that the easy and predictable prosperity of export-led growth and cheap labour costs will not last forever. The emerging manufacturing giants of China and India are forcing the Tigers to look into creating new industries that add more value and create stronger service sectors to help provide stroeg demand at home, so that they can compete.

1. Development is impossible if Nigeria do not use the policy of import substitution, We can not continue to depend on import without developing our industrial sector.

2. Government should focus on the production of fertilizers, plastics and synthetic fibers from the country’s huge natural resources. This would encourage agricultural’ productivity.

3. Nigeria must find her comparative advantage. She must emphasis on products that can bring astonishing growth to her economy. An example is that Singapore and Hong Kong focused on being international financial centers while Taiwan and South Korea focused on their manufacturing sector with emphasis on Information Technology.

4. Nigeria should establish a banking system that favors the culture of the Nigerian
people.

5. Nigeria should formulate economic policies that would keep the country’s corporate and household debt at moderate and manageable levels.

6. The educational sector of the country must be given priority attention as obtained in the Asian Tigers.

7. Corruption, theft, and outright looting of government treasury must be discouraged A corrupt country cannot see through the process of development.

8. Jobs should be created for the teeming population of Nigerian youth. They must also be encouraged to create jobs in the informal sector of the economy.

9. The productive base of the economy needs to be restructured and diversified to reduce dependence on oil and imports.

10. Nigeria should vigorously pursue the achievement of fiscal and balance of payment viability.

11. Further devaluation of the naira must be stopped to prevent distortions in the economy.

Summary 
The Four Asian Tigers or Asian Dragons is a term used in reference to the highly developed economies of Hong Kong, South Korea, Singapore and Taiwan. These nations and areas were notable for maintaining exceptionally high growth rates (in excess of 7% a year) and rapid industrialization between the early 1 960s and 1 990s. By the 21st century, all four have developed into advanced and high-income economies, specialization in areas of competitive advantage. For example, Hong Kong arid Singapore have become world-leading international financial centers, whereas South Korea and Taiwan are world leaders in manufacturing information technology. Their economic success stories have served as role models for many developing countries.

Despite a World Bak report crediting liberalness policies with the responsibility of the
boom. including maintenance of export-led trade regimes, various analysts criticized the
institution for overlooking a range of other state supported policies that facilitated growth.
The tigers experienced decades of supercharged growth based largely on state industrial
policies supporting exports to rich, industrialized nations.

Even the World Bank report acknowledged benefits from policies of the repression of
the industries. As a result these economies enjoyed extremely high growth rates sustained
over decades. Other important aspects include major government investments in education,
nan-democratic and relatively authoritarian political systems during the early years of
development, high levels. bond holdings, and high public, and private savings rates.

Questions
I. Name the countries that were referred to as Asian Tigers? Why was their growth
referred to as an economic miracle? Discuss.
2. What influence do the China economy have on the economies of the Asian Tigers.
3. Identify seven lessons from the Asian Tigers for any developing economy like
Nigeria’s.
4, Explain in detail the economic strategies employed by these countries called the Asian
Tigers.

In recent times, some commercial banks use savings withdrawal and savings deposit slips in addition to the passbook. Withdrawals can be made without prior notice. Nevertheless, the interest earned on the savings deposit account is relatively lower than that earned on fixed time deposit accounts.
At the same time, there is always an upper limit on the amount of money a customer may keep in a savings account. If a customer exceeds this stipulated maximum (which differs from bank to bank); the bank will advise him to transfer the excess into a time deposit account.


The Transfer of Money
Commercial banks help their customers in making payment on their behalf through the use of transfer facilities like bank drafts, certified cheques, bills of exchange or discounted bills of exchange and standing orders.

Customers operating demand deposit accounts do make payments through the issuance of cheques which are drawn on their banks. The commercial bank then transfers money on its customer’s behalf to the bearer or the person it is directed to pay money to. Likewise, bank drafts and bills of exchange are used similarly by customers of the bank in trade transactions.

Customers of the bank can as well give their banks standing orders; which are special arrangements between the customer and his bank, with regards to regular payments of rents, school fees, insurance premiums, annual dues of societies/bodies and salaries and wages of staffs in the case of business units.

This function is highly beneficial to the bank customer since it affords the
customer to pay money (even large sums) over a long distance without the need for
personal contact and the need to carry large sums of money around.

Provision of Loans, Advances and Overdrafts
This is the major source of income of commercial banks. Loans and advances are money loaned out to customers for a specified period of time and requires interest payments until the total loan is fully paid back.

Overdrafts are privileges granted to current (demand) deposit account holders to withdraw more money than deposited in their accounts. However, this amount loaned out (or the excess withdrawn over and above the amount in his account) carries a fixed rate of interest.

Furthermore, commercial banks lends to their customers by discounting bills of exchange. This implies that the bank on behalf of the bank customer (who is a debtor that made out a bill of exchange to his creditor) pays the creditor on behalf of the bank customer before the date specified on the bill of exchange. This enables the bank customer to meet his indebtedness and the creditor to receive speedy payments for goods sold or services rendered.