Financial Development In The Maritime Sector Of Nigeria: An Econometrics Analysis Approach

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Financial Development In The Maritime Sector Of Nigeria: An Econometrics Analysis Approach


Abstract


The study examined the role of Financial Development In The Maritime Sector Of Nigeria: An Econometrics Analysis Approach. The specific objective of this study is to evaluate the effect of financial electronic payment systems on Maritime Sector Development and the entire Nigerian economy. financial development was captured by electronic payment instruments such as value of ATMs (VATM), value of POS (VPOS), value of Mobile transactions (VMOB), and value of WEB transactions (VWEB) while GDPTR and RGDP represent Maritime sector development and Nigerian economy respectively. The study used secondary data sourced from the Central Bank of Nigeria and the National Bureau of Statistics. Data for the study were analyzed using stationarity tests, heteroskedasticity, Ramsey reset, Ordinary least square regression, Robust least Square regression, Cointegration and Granger-Causality statistical techniques at the 5% level of significance. The findings showed that the electronic payment instruments has significant effect on the Maritime sector and the Nigerian economy in the short-run only, while in the long-run, the effect was insignificant. The study concludes that financial developments captured by the payment instruments has significant effect on the Nigeria Maritime sector and on the Nigerian economy, in the short-run only. The study recommends that the Federal government should enact policies that will restrict the collection of cash in all revenue offices in the maritime sector and other sectors of the economy; and in addition channel incremental revenue towards the provision of ports and other enabling infrastructures to engineer growth in the maritime sector and the Nigerian economy.


Chapter One


Introduction

1.1 Background to the Study

financial development refers to the development of financial instruments, channels and funding sources or mechanisms aim at delivering cutting edge services and tapping potential opportunities. financial development could be extended to include the use of payment instruments and channels to meet financial needs and opportunities within the maritime sector, thereby easing the burden of cash-risk activities. This system of financial development entails the use of electronic payment mediums such as Point-of-Sale terminal (POS); Automated Teller Machines (ATMs); Mobile payment transfers (MPAY); Web Payment Channels (Web pay); Credit or Debit Card payment systems etc. (Adeyeye, 2018).

Electronic payment is a system of effecting financial transactions or payments for goods and services through an electronic medium, without the use of cheques or cash. It is popularly called E-payment systems. E-payment systems grow with growth in technology and it is expected that the system will remain dynamic with inventions and scientific or technological discoveries. A consolidation of buying and selling activities using e-payment channels and platforms is referred to as E-Commerce. Garret and Skevington (1999) noted that E-Commerce entails authentication, Non-repudiation, confidentiality and trust. The AUTHORS admonished on the use of E-commerce and E-payment systems to encourage financial development. These views were equally supported by Tom and Puneet (1996).

The maritime sector ranks as the second highest revenue generator in Nigeria after the oil sector (NPA, 2018) and if properly harnessed, would be a sector to beat in terms of revenue generation in Nigeria.

This study explored the effects of financial development practices and skills of the marine business development.
financial development particularly in maritime industry has only become popular in Nigeria in the 1990s . There is little research linked to financial development in maritime firm operating in Nigeria and the researcher would like to narrow the gap. This research was aimed to find out the rationale behind the effect of financial development practices and skills of maritime firm operating in Lagos and why the small firms are not growing into bigger enterprises. The researcher has observed that access to finance is not the major barrier to the success of small businesses in Lagos town, but the key challenging aspect is how to manage and control the financial affairs of the business. Many maritime firm in Lagos town are finding it hard to grow and survive not because the owner does a poor job or provide inferior service, but because their businesses are not managed professionally. These management problems include financial development, human resource management, marketing management, operations management, and strategic management. Given that financial development is one of the key aspects of the well-being and survival of a business, it is the managerial activity concerned with the planning and controlling of the firm’s financial resources (Pandey, 2004). Therefore the purpose of this study is to explore the effect of financial development practices and skills of maritime firm in Lagos town.


1.2 Statement of the Problem

Maritime sector are extremely important to a country economy, because the sector provide goods, services and jobs. Good financial development practices are crucial for the survival of many businesses of all types and sizes. To date there is no significant research related to the effect of financial development practices and skills on business development of Maritime firm operating in Lagos. The researcher noted that many of the Maritime firm have not realized any meaningful growth since they established their businesses; some have stagnated whilst most of them fail to service their fixed monthly expenses and eventually close down. Furthermore financialinstitutions in Lagos exercise a very low loan approval rate for start-up businesses due to lack of collateral and equity, capital is a crucial resource to a small business and specific principle of financial development practices and skills could improve financial stability of Maritime firm in Lagos. Majority of the people that start up small businesses in Lagos are driven by the prevailing economic situations and establish new businesses out of necessity. Most of these Maritime firm often do not have financial development skills and are not sufficiently skilled to operate the business successfully.

Majority of the studies focusing on financial development in Maritime firm at hand have been done in other developed countries and a significant number have been done in other southern African countries, while only a few or none have so far been done in Nigeria. This unfortunate fact made it very crucial that a study need to be done, especially on Maritime firm operating in Lagos. The Nigerian government has put in various efforts to create conducive business environment for Maritime firm to operate in.

It is difficult to determine the financial development practices and skills needed for marine business development in the maritime sector in Lagos, due to unavailability of information relating to their financial development practices and skills.


1.3 Objective of the Study

The main objective of this study is to examine the financial development in the maritime sector of Nigeria: An Econometrics Analysis Approach.

The specific objectives of this study are therefore;

  1. To evaluate the effect of financial development on the Nigeria maritime sector;
  2. To assess the effect of financial development and maritime services on the Nigerian Economy.

1.4 Research Questions

It is thus the interest of the authors to answer research questions such as;

  1. Does financial development have any effect on the Nigerian Maritime Sector?;
  2. What is the outcome of financial development and maritime services on the Nigerian economy?

1.5 Hypothesis of the Study

To resolve these, two hypothesis were proposed, thus;

  • H0: financial development does not have any significant effect on the Nigeria Maritime sector development.
  • H0: financial development and maritime services does not have any significant effect on the Nigerian Economy.

1.6 Significance of the Study

This study was crucial because not so many studies have explored the effect of financial development practices and skills on marine business development in Maritime firm in Lagos town. Therefore there is an urgent need to uplift this sector to promote financial development in the SME sector in Lagos. This study is important to the government and policy makers, the benefit of this study towards the government and policy makers is that, the study provides insight to the government and policy makers regarding the relevance of financial development’s practices and skills for marine business development in Maritime firm. This study is also significant to the maritime sector in Lagos especially the owners and managers. The owners and managers within the SME sector will benefit from this study on how to manage their businesses financial aspects successfully and how to make well informed decisions when it comes to financial matters of their business. This study aimed to close the existing gap about financial development practices and skills in Maritime firm in Lagos.


1.7 Limitation of the Study

The researcher has encountered several constraints pertaining to the implantation of this study. Due to time constraints, the researcher was expected to complete the study within a given time framework for him to graduate with his master’s degree. However the researcher had to fulfil his duties within the stipulate time period . Due to resources constraints, the researcher had to recruit undergraduate students to assist with the collection of data. The undergraduates required training on how to collect the primary data. However, the researcher ensured that appropriate interview skills were transferred to undergraduate students. Financial limitations also limited the researcher to collect data from Maritime firm that are operating on the outskirt of Lagos which was more costly. Confidentiality was also another limitation since some of the respondents were reluctant to share information. Nevertheless the researcher assured the participants of confidentiality of information provided. Another limitation encountered by the researcher was that not all Maritime firm owners/managers could speak freely due to some company policies


1.8 Definitions of Key Terms

Skills:

Is knowledge acquired through formal or informal training as well as through practice (Perks & Smith, 2006).

Financial Development:

Entails planning for the future of a business enterprise to ensure positive cash flow (Oduware, 2012).

Financial Performance:

Can be defined as a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues (McMahon, 1995).

Management:

Process of attainment of predetermined goals by directing activities of a group of persons and employing other resources.

Manager:

Refers to the person who is hired to run and manage the business.

Owner-Manager:

Refers to the person who plays the role of both owner and manager.


Chapter Five


Discussion, Conclusions and Recommendations

5.1 Introduction

This chapter will discuss the conclusion and recommendation of the study on financial development in the maritime sector of Nigeria: An econometrics analysis approach.


5.2 Conclusion

This study studied financial development and Maritime Sector Development: Anan econometric approach. The study discovered that financial development represented by value of Automated Machine transactions, value of point-of-sale transactions, value of mobile transactions and value of web transactions exert a positive and significant effect on the Nigerian Maritime sector only in the short run while on the Nigerian economy, it exerts a negative and significant effect in the short-run but insignificant effect in the long-run. Hence, we conclude that financial development has positive significant effect on the Nigeria maritime sector and negative significant effect on the Nigerian economy in the short-run.


5.3 Recommendation

Based on the outcome of this research, we recommend as follows;

  1. That the federal government should enact Policies prohibiting the use of cash in making revenue payments in the maritime sector of Nigeria and encourage the full implementation of cashless payment instruments such as point of sale payments, mobile transfers, web payments and deployment of ATMs and other modern financial development technologies in every facet of the maritime subsector business. This will ensure full accountability for government revenues from all her maritime businesses including duty payments and revenue collections, port charges, annual fees, rent and dues collections, license fee payments, revenue collections into the cabotage vessel financing funds, etc. will minimize the use of third party revenue collection agents and corrupt government officials and plugging revenue leakages in the sector for accelerated development of the maritime sector.
  2. The federal government is admonished to develop appropriate framework that will be responsible for the sustainance of a robust and dynamically efficient payment instrument technologies/innovations to drive its revenue collections across the sectors. The increased funding to the government from financial payment technology implementation is expected to be channeled towards provision of ports infrastructures, dredging of the canals and shallow inland waterways to make them deep in order to attract bigger maritime vessels. It will also provide funds to the government authorities for developmental planning and funding of indigenous vessel acquisitions under the Cabotage Act, thereby growing the nation’s maritime sector contribution to Nigerian economic growth and development. This is another avenue towards the diversification of the economy.

Financial Development In The Maritime Sector Of Nigeria: An Econometrics Analysis Approach


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