Stabilization Policy In Nigeria – Security Market
The problem of conflicting objective arises given the fact that the Central Bank of Nigeria acting on behalf of the Federal Government at times may have multiple objectives. The question of whether these objectives can be met simultaneously or will the pursuit of one objectives lead to the authorities further away from another?
All these may lead to the problem of conflicting interest. We can gain some insight into the issue of conflict by studying the actual performance of the country’s economy from independent to the present day Vis-a-vis the close examination of the rate of inflation, unemployment and real economic growth for the past forty one (41) years, this has been discussed previously.
The ultimate aim of any government policy is always to improve the economic and social well being of the entire citizenry by the maintenance of peace and tranquility as well as the protection of lives and property. Therefore, it requires careful planning for monetary policy, fiscal policy and all other policies to be complementary rather than being competitive or being guided by the same objectives.
These policies should be seen at all times as alternatives or complementary ways of achieving the same set of objective, target or goals, more on this subject has also been discussed. In Nigeria and other developing countries especially in Africa, government has always relied on the monetary policy as a way or method of solving their economic and financial challenges. These policies are based on the neo-classical assumption of a constant velocity of the circulation of money.
We have proved elsewhere using a suitable statistical methodology, that for the country’s economy, velocity is a decreasing function of time. This article is based on the attempt to examine and analyse the effectiveness of monetary policy as a tool for economic stabilization in Nigeria. By economic stabilization we mean actions aimed at preventing erratic movements in the magnitudes o major economic indicators or variables. Stabilization policies seek to control the growth of income, employment, output and price for commodity.
The Second Tier Of The Nigerian Security Market
The Nigerian Security Market was a strategy designed by the government to prepare Nigeria’s economic situation for structural economic adjustments. Any relevant examination of the Nigerian Security Markets can be made against the medium term economic goals of Nigeria if it is to be seen as a means rather than as an end in itself.
It is obvious that the major policy issue at the moment is the Naira. Based on this, the the authority as at the adopted and implemented the policy to move from fixed rate to more flexible rate, in essence two tier foreign exchange system which is not a complete shift to a freely floating exchange rate system, our main concern in this articles is to appraise the Nigeria’s version of the Two Tier Exchange Foreign rate system against the policy goal in order to avoid balance of payments crisis without controls and to clear the way for whatever policies seen best on domestic economic grounds.
Any meaningful appraisal of the two tier foreign exchange market potential or lack of it of the system for achieving the current account surplus or reduction in the outflow of Nigeria’s capital, which will reduce deficit unless, offset by increase of export or reduction of imports and finally, a rise of external reserves.
Before the creation or the establishment of the second tier security market in Nigeria, on the 29th September 1986. The general impression had been that the stock exchange was an exclusive club of big companies or well organised corporate entities, considering the question requirement, which some people consider stringent especially in the areas of the following;
- The number of years of trading record required.
- The proportion of shares to be held by the public.
- The number of shareholders.
- The listing fees and then
- The disclosure requirement.
The major merits of the second tier security market include the following;
- The opportunity will allow a wide participation in capital market activities thus breading the ownership base of Nigerian companies.
- The market will also afford or create opportunities for small companies to become quoted and have access, though limited to fund in the capital market.
- The market will minimize the cost and conditions of going public thus making quotation more attractive to private companies. The substantial share still retained by promoters will help to reduce the fear of ownership dilution.
- The second tier market will improve the confidence of the public financiers etc. In their commercial with these companies.
- The second tier securities market will ensure continuity of companies after the death of their key promoters as opposed to the present situation where most private companies collapse after the death of their key sponsors.
- The market will assist in attracting indigenous entrepreneurs into the capital market to help take care of the apparent imbalance in between demand and supply of securities in the capital market.
- The second tier market will provide opportunities for small companies to get acquainted with capital market activities and subsequently graduate themselves into fully quoted companies thus increasing securities, which enjoy trustee status.