The Impact Of The Global Economic Meltdown On The Achievement Of The Millenium Development Goals In Nigeria

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Abstract


This research work is a critical analysis of the Impact of the Global Economic Meltdown on the Achievement of the Millennium Development Goals in Nigeria, with special reference to Ebonyi state. The study identified the impact of Global Economic Meltdown on some elected Millennium Development Goals in Nigeria, traced the historical background of the Global financial crisis, its implications on the Nigerian economy, the various features of the Global financial crisis. Based on data collected from the respondents who reacted on the questionnaire given to them. The study concluded that Global Economic Meltdown has a significant relationship with the Achievement of the Millennium Development Goals and that with total commitment to the targets, the Millennium Development Goals will be achieved by 2015. From our analysis on what Global Economic Meltdown entails, one can infer that it would hinder the achievement of the Millennium Development Goals. It is therefore our view that for Nigeria to achieve her dreams of the MDGs holistic efforts should be made to combat the Global Economic Meltdown. It was recommended among others that there should be diversification of export to natural farm products like cocoa, rubber, ground nuts, palm products, since the United States of America whose ailing economy triggered off the Global Economic Meltdown is among the major importers of crude oil.


Chapter One


1.O Introduction

1.1 Background of the Study

Several researchers have described the current financial crisis as imposing the greatest challenge to the world economy since the end of the World War 11 for this reason most of them argue that unlike past financial crisis, which were confined to particular regions. The financial turmoil is quickly spreading across continents, that unless serious actions are taken to shore up flattering economies and restore confidence in global economy, the world will face a deep and prolonged recession.

The reasons for this crisis are varied and complex. The crisis can be attributed to a number of factors pervasive in both the housing and credit markets, which developed over an extended period of time. There are many different views on the causes, including the inability of home owners to make their mortgage payments, poor judgment by the borrower and the lender, speculation and over building.

The reasons for this crisis are varied and complex. The crisis can be attributed to a number of factors pervasive in both the housing and credit markets, which developed over an extended period of time. There are many different views on the causes, including the inability of home owners to make their mortgage payments, poor judgment by the borrower and the lender, speculation and over building during the boom period, risky mortgage products, high personal and corporate debt levels, complex financial innovations that distributed and perhaps concealed defaults in central bank policies and government regulations.

The global meltdown crept in gradually like wildfire, to virtually all the developed countries. According to Ishikawa (Aforka, 2007: 58) from Tokyo, Japan, “the entire world is on fire, fire that started on wall street. The question comes, how did the world get into this, without any one seeing it coming or alerting the world about this danger that has now engulfed the Global financial system?”

The Global financial crisis which first showed signs in the United States of America in late 2007 is becoming contagious and is apparently affecting directly or indirectly, every economy on the globe. The United States being a super power politically and economically have the largest number of crumbling financial institutions. This crisis is presently putting to test the ingenuity of the various central banks all over the world. The financial crisis, other wise known as the „credit crunch‟, is still biting hard but has substantially been controlled through a cock tail of measures doled out by many countries.

The Global Economic Meltdown has been made a escape goat for our failed economy by our leaders. They expect Nigerians to forget that the economy has been under performing in the last decade or more. In spite of our abundant agricultural and mineral resources, there is a rise in the price of crude oil particularly in the last four years when income from this resource quadrupled in dollars. In explicably, our harvests in the same period were raising unemployment, double digit inflation, poorly considered monetary and fiscal policies, degraded infrastructures etc.

The factors mentioned above have actually affected the move towards the achievement of the Millennium Development Goals come 2015, in Nigeria.


1.2 Statement of the Problem

The financial crisis began in the late 2007 in the United States of America. It later metamorphosed into what we have today as the Global Economic Meltdown. Since United Stated is a super power economically and politically, made the crisis to spread like wildfire across other countries of the World. The root cause of the problem is the work of financial engineering of capital which manifested in high default rates in sub-prime and adjustable rate mortgages (2005-2006).

Fannic-Mac (Federal National Mortgage Association) and Freddie Mac (Federal Home Lawn Mortgage Corporation) were the creatures of the congress and officially known as GSE (Government Sponsored Enterprises). They were buying loans from banks on what is called secondary markets. Banks offer loans to consumers, and then sell that loan to Fannic-Mac. The United States increased the money supply through the banking system with the aim of lowering interest rate. Those who knew little about the market saw it as an irresistible get rich quick scheme jumped into the system thinking the economy was lost in a swirl of extravagance and recklessness devoid of professional ethics and direction.

Today the magnitude of the global financial crisis is assuming alarming dimensions and it is greatly making a negative impact to catechizing the Millennium Development Goals set for 2015. This financial crisis has led to the depreciation of the purchasing power of the naira and the sharp increase in the prices of goods and food items in the market, which is a testimony of the hardship experienced in Nigeria. A state where majority of the population fall below poverty line cannot acquire economic growth and development, or attain high standard of living. It is based on this premise that the study attempts to determine the extent that the Global Economic Meltdown has posed as an obstacle towards actualizing the MDGs in Nigeria.

The study attempts to provide answers to the following

Research Questions:

  • Does the Global Economic Meltdown Pose As a Barrier towards the achievement of the Millennium Development Goals in Nigeria?
  • What are the impact of the Global Economic Meltdown on the Millennium Development Goals.
  • Will Nigeria achieve the targets of the Millennium Development Goals come 2015.
  • What are the solutions to the identified problems.

1.3 Objectives / Purpose of Study

The general objective of this study is to investigate the impact/effect of the Global Economic Meltdown on the achievement of the Millennium Development Goals in Nigeria. While the specific objectives include;

  1. To critically examine the barrier posed by the Global Economic Meltdown towards the actualization of the Millennium Development Goals in Nigeria.
  2. To identify the impact of the Global Economic Meltdown on the Millennium Development Goals.
  3. To ascertain whether Nigeria will achieve the targets of the Millennium Development Goals come 2015
  4. To find solution to the identified problems.

1.4 Significance of the Study

The significance of this research work cannot be over emphasized, as the topic under review has been an issue of paramount concern to the nation and the world at large

The study will benefit administrators, public and private organizations, the government, researchers and academics. It will provide guiding steps towards strategic planning, policy formulation and to attain other major decision making strategies.

In essence, the findings and recommendations of this work will add to the existing body of knowledge. It will be of important significance to Nigeria in the following ways.

  1. To develop and adopt appropriate strategies to remedy the global economic crisis.
  2. The findings of this research work will also be useful to the government in its efforts to achieve the targets of the Millennium Development Goals.

1.5 Scope and Limitation of Study

This work will cover the effect of the Global Economic

Meltdown on the achievement of the Millennium

Development Goals in Nigeria, ways that the global financial crisis has affected the economy of Nigeria.

A lot of factors militate against this work. The most challenging factors include:

  • Financial Constraint: the researcher experienced financial constraint which limits her traveling to different parts of the state to collect data for the study.
  • Time Constraint: The researcher had limited time due to her academic work load, job constraint, ill-health and household chores.
  • Attitude/Knowledge of Respondents: some of the respondents had poor knowledge of what economic recession was all about. Some felt reluctant to give out the needed information.

The aforementioned constraints limited the study to cover only six local government area in the state of study. Never the less, the researcher ensured that the validity and reliability of the research findings were not compromised.


Chapter Five


5.0 Summary, Recommendations and Conclusion

This chapter directs the entire research work to a concise point. Here the summary of major findings are discussed, conclusion is drawn and workable recommendations postulated.


5.1 Summary of Major Findings

Based on the analysis of data collected, the following major findings were made:

  1. The Global Economic Meltdown has a significant relationship with the realization of the Millennium Development Goals in Nigeria.
  2. The Global Economic Meltdown has adversely affected the achievement of the Universal Basic Education, the eradication of extreme hunger and poverty, gender disparity, maternal and infant mortality.
  3. That rising inflation, crash in the stock market, huge deficit in the 2009/2010 budget are problems caused by the Global Economic Meltdown, which affect the Nigerian Economy.
  4. It is therefore established that high rate of hunger and poverty in Nigeria, lack of qualified health personnel are the major challenges facing the attainment of the Millennium Development Goals in Nigeria.
  5. It was discovered that government‟s intervention such as the Establishment of National Poverty Eradication Program, the use of Women for Change Initiative (WCI) and the provision of adequate health care services has contributed to the achievement of Millennium Development Goals in Nigeria.
  6. That with total commitments to the targets, the MDGs will be achieved in 2015 particularly, halt in the spread of HIV/AIDS, increase in the proportion of positions occupied by women, reduced maternal and infant mortality, and finally ensuring that by 2015 boys and girls alike will be able to complete a full course of primary education.

5.2 Recommendations

After careful examination of the impact of the Global Economic Meltdown on the Achievement of the Millennium Development Goals in Nigeria, with Ebonyl State as a case study, the following recommendation was proffered.

  1. The government at all levels should be able to collectively develop an economic system based on transparency and fairness to all, regulations and public monitoring, with partnership between a governmental and non-governmental organizations and not for profit making.
  2. There should be diversification of export to natural farm products like rubber, cocoa, groundnuts, palm products etc. since the United States whose ailing economy triggered off the financial global crisis, is among the main importers of Nigeria‟s crude oil and any problem in the economies of the nations that trade with Nigeria will negatively affect Nigeria‟s earnings. Secondly United States of America is currently considering a strategic change in its energy policy under the Obama government. The policy change will encourage the discovery of bio-fuel and electricity, to power automobile to minimize the independence on imported crude oil. The implication is that the United States will surely create a glut in the crude oil market which may further drive down the price per barrel.
  3. Job opportunities should be created, especially for our teeming young university graduates.
  4. Value Added Tax should be slashed by the government and an increased Tax holidays for businesses.
  5. The Central Bank of Nigeria(CBN) should increase the percentage of statutory reserves from profits by banks to provide more cushion in lean times.
  6. While not precluding the needs for the various tiers of government to right size their employment levels, labour retrenchment should not be the easy solution out of declining revenues, neither should falling into arrears of wage payments.
  7. The federal government should not allow Naira depreciation beyond the point where it unduly raises production costs for the import-dependent Nigerian production or imposes unbearable debt servicing burdens for domestic user of foreign currency denominating loans.
  8. The government should stand ready to bail any failing bank in a timely and orderly manner.
  9. The government should resist any temptation to resort to exchange and import controls to solve problems that a deepening of the global recession may throw up.
  10. Banks and indeed all financial institutions should comply with rules on corporate governance, as well as ethics and professionalism.
  11.  High level importation should be discouraged. Therefore the government should set up strategies to industrialize the nation and at the same time attract foreign investors. This would reduce the level of importation in the country, hence locally manufactured goods should stand the chance of being patronized. xii. There should be diversification of Nigeria‟s foreign assets to various currencies. Supposing, for example the main managers of our foreign reserves (JP Morgan) had gone burst as a few American banks did, what should have been the fate of Nigeria?.
  12. Setting up of presidential task force on the global financial crisis to be chaired by the President/Commander in-chief of Armed Forces himself, to continuously review the impact of the crisis and take necessary actions to shield Nigeria from its ravages.
  13. The growing gap between the elite and the impoverished also has its fair share on the nation‟s economic meltdown and therefore should be bridged. xv. Government should introduce economic stimulus projects that are implementable within the medium term such as roads reconstruction, rehabilitation of School, hospitals, power supply infrastructure, low cost urban housing, etc that would create employment.
  14. There should be effective collaboration with relevant partners and multi-sectoral coordination will be very vital to attaining national development priorities. We still have about four (4) years to double our efforts to achieve the Millennium Development Goals.
  15. Government at all levels should be involved in a credible health care delivery since four out of the eight goals for world development (MDGs) are direct heath goals (reducing child mortality; improving maternal health, combating HIV/AIDS, malaria and others, and promoting environmental sustainability). The other four goals are strong health determinants (eradication of extreme poverty and hunger, Universal Primary education, gender equality and women‟s empowerment, and global partnership for
    development).

Suggestions for future improvement in Halting the spread of HIV/AIDS include;

  • Abstinence from sex
  • Use of condoms
  • Through public enlightenment campaigns and Counseling
  • Having and maintaining one sex partner
  • Inventing the universal treatment for HIV/AIDS etc.

5.3 Conclusion

It is obvious from the analysis and discussions in this work that the status of the Global Economic Meltdown in Nigeria is dismal relative to its impacts towards the achievement of the Millennium Development Goals.

The current global financial crisis poses real threat to Nigeria, as its effects are transmitted through the public sector and the banking system. Deepening global recession would impact adversely on Nigeria‟s oil revenues, this would force the various tiers of government to rationalize their expenditures and introduce other economic stabilization measures. Poor policy response could depress economic activities and increase the vulnerability of banks and other business corporations to shocks.

The former President of Economic Community of West African States (ECOWAS), Dr. Mohammed Ibn Chambers while speaking at a five day Africa Youth Leaders Peace Summit said that Global Economic Meltdown is threatening the attainment of the Millennium Development Goals by 2015.

While the MDGs targets are quiet laudable, the major challenge however, is in the pragmatic implementation due to effects of the Global Economic Meltdown. To ensure the attainment of the MDGs require Nigerian government and International Development Partners to muster the necessary political will and mobilize enough resources for the implementation of the Millennium Development Goals. This situation calls for measures that would ensure economic reconstruction, social justice and self sufficiency.

These are required in the reform process to alter and re-align aggregate domestic production pattern to achieve steady and balanced growth, in line with the spirits and features of Structural adjustment programme (SAP), vision 2010 and National Economic Empowerment and Development Strategy (NEEDS) and Local Economic empowerment and Development Strategy (LEEDS) at the State and Local Levels respectively.

Our governments should stand ready to stabilize aggregate demand and rescue and falling bank to minimize the effects of the crisis towards the achievement of the Millennium Development Goals.

Finally if poverty and hunger could be eradicated through appropriate policy measures, all other challenges would ease out


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