EFFECT OF DEBT MANAGEMENT IN NIGERIA (1960 – 2005)

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EFFECT OF DEBT MANAGEMENT IN NIGERIA (1960 – 2005)

ABSTRACT

This study is on Debt Management in Nigeria from (1960 – 2005) challenges and prospects. This study seeks to determine how and what contributed to Nigeria public debt, both internal and external. The study is a survey research. The study randomly selected three organizations responsible for managing debt. A sample of 364 was selected from a finite population by yamene’s statistical technique. Questionnaire was developed for soliciting information from the respondents. A test-retest method was used to make the questionnaire reliable, percentages were used to analyze the biodata and question items while X2 Test of a contingency table were used to analyze the hypotheses. This study found out that Nigeria is not heavily indebted, corruption, inadequate resources are not the challenges, poverty reduction, effective fiscal and monetary policies, plus sustainable economic growth are not prospects, that debt reschedule, debt buy back and debt conversion programme are not ways of managing Nigeria external debt. This work concludes that deficiencies in managing our debt by debt agencies, non centralization of the offices, and functions/activities, plus unpatriotic attitude of past leaders, including the rapid rate of technological innovation, and overnight policy reversals by past dictatorships government. Recommendations are that debt management office, in collaboration with other agencies managing debt in Nigeria should work out guidelines and criteria for borrowing from both internal and external sources by all tiers of government, even as the viability of the projects for which loan may be obtained and determined through realistic feasibility studies. Proper funding of the agencies and award for performance, adequate framework, mainly targeted of price stability, and form a good habit that will say no to corruption and pave way for effective communication and interaction for more productivity.

TABLE OF CONTENTS
Cover Page
Title Page i
Approval page ii
Certification iii
Dedication iv
Acknowledgements v
Abstract vi
Table of Contents vii
List of Figures xi
List of Tables xii
CHAPTER ONE
1.1 Historical Background of the Study 1
1.2 Statement of the Problem 4
1.3 Objectives of the Study 5
1.4 Research Questions 5
1.5 Research Hypotheses 5
1.6 Significance of the Study 6
1.7 Limitation of the Study 6
1.8 Scope of the Research 6
1.9 Definition of Terms 7
References 9
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.0 Conceptual, Issues, Nature and Meaning of Debt Management 10
2.1 Genesis and Trend of Nigeria Public Debt 10
2.2 The Establishment and Operational Activities of the Debt
Management Office (DMO) 11
2.2.1 The Establishment of Debt Management Office 2000 12
2.2.2 Objectives and Functions of Debt Management Office 2000 12
2.3 Prospects and Benefits on Debt Management Office in Nigeria 13
2.3.1 Debt Management Office’s Strategic Plan 2002 – 2006 14
2.3.2 Organizational Structure and Budget of Debt Management (DMO) 15
2.3.3 Policy Framework for Debt Management 15
2.3.4 Legal/Regulatory Framework for Debt Management 15
2.3.5 Paris Club Data Reconciliation Negotiation of Debt Reconciliation 16
2.3.6 Bilateral Negotiation of Debt Management Office 16
2.3.7 London Club and Commercial Debts 16
2.3.8 External Relations Activities of DMO 17
2.3.9 Debt Conversion Activities 18
2.3.10 Debit Service Payments Activities 18
2.3.11 Debt Relief Campaign/Waiver 18
2.3.12 Domestic Debt Management Work Plan 19
2.3.13 Significant Achievements of Debt Management 2002 – 2006 DMO 20
2.4 The Need for External Debt Acquisition in Nigeria 22
2.5 Ways and Methods of Contracting Public Debt (DMO 2004:2). 23
2.6 Structure and Composition of Nigeria Public Debt D.M.O 2004 24
2.7 Different Foreign Lending Institutions to Nigeria 28
2.8 Managing Paris Club Debt and Data Reconciliation D.M.O Data
Based 2000 – 2005 29
2.9 Domestic Debt Operation and Capital Market Development (D.M.O) 2005 30
2.9.1 Domestic Debt Profile 30
2.10 Holding of Domestic Public Debt in Nigeria 31
2.10.0 Percentage Composition of Domestic Debt 32
2.10.1 Central Trust of Current Domestic Debt Programme 32
2.10.2 Issues of Capital Market Development 33
2.10.3 Meeting the Challenges of Borrowing from the Capital Market 35
2.10.4 Rationale for Issuing Bonds 35
2.10.5 Benefits of Bond Issuing to the Economy 36
2.10.6 Elements of Domestic Debt Problem in Nigeria 32
2.11 Nigeria External Policy and its Implementation 37
2.12 Guidelines for Borrowing by Federal, States and Locals Government and Implementation 38
2.13 projects Financed by Paris Club Loan 40
2.14 Problems and Challenges in Achieving Efficient Debt Management
in Nigeria 41
2.15 Characteristic of Efficient debt Management 44
2.16 The Dynamics of Nigeria External Debt 46
2.17 Indicators of Severity of Nigeria Debt Burden 47
2.18 Fundamentals and Immediate Factors that Plugged in
Nigeria into Debt Crisis 48
2.19 Strategies Adopted so Far at Managing Nigeria External Debt 50
References 55
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction 56
3.2 Research Design 56
3.3 Population of the Study 56
3.4 Sampling Procedure 57
3.5 Sample Size Determination 57
3.6 Sources of Data 58
3.7 Description of Research Instrument 59
3.8 Validity of the Research Instrument 59
3.9 Reliability of the Research instrument 59
3.10 Method of Data Analysis 60
References 62
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
4.1 Introduction 63
4.2 Questionnaire Distribution 63
4.3 Background Information of the Respondents 63
4.4 Analysis of Items in the Questionnaire of Section B 66
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction 80
5.2 Summary of Findings 80
5.3 Conclusion 80
5.4 Recommendations 81
5.5 Suggestions for Further Studies 81
References 82

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