This study, Macro-Economic Model of the Nigerian Economy, Which has been the result ofa Ministerial Advisory Committee of the Federal Ministry of Finance, is an attempt to produce a, preliminary background information material with a view to providing some basis for understanding the Nigerian economy. The text is divided, into three main parts.
Part One discusses the principal sectors of the Nigerian economy which include agriculture, manufacturing and petroleum, among others, as well as aggregate demand, the labour market, the monetary and financial sectors, and, of course, the informal financial sector and the; external sector.
Part Two of the text presents a model of the Nigerian economy, with eighty-eight equations which are either behavioural or identities; while Part Three discusses the results of the estimated equations.
A unique feature of the study is the effort to discuss and test the Nigerian informal financial sector. In addition, the formal financial sector is, also examined.
There are several studies on the Nigerian economy. Most of such studies have been cormnissioned by international organisations. research institutes. regional organisations and individuals interested in Nigeria‘s development. In l99l, as members of the Ministerial Advisory Corrunittec (MAC) of the Federal Ministry of Finance, we discovered that the Ministry of Finance had no basis upon which to analyse and track movements within the economy. The Ministry relied solely on information from other ministries, most of which were ad hoc, competence of policy -makers including the Minister and reports from relevant international and regional organisations.
The Committee insisted that the Ministry of Finance is so crucial to the policy- making and implementation process that it needed some basis for understanding the Nigerian economy. This study is, therefore, an attempt to provide the Ministry a preliminary back- ground information on the economy. The effort is to examine a model mirroring the Nigerian economy with the understanding that subsequent attempt will be made to enrich the information provided.
The project study is divided into three parts, namely: Part l discusses the principal sectors of the Nigerian economy. The sectors include: agriculture, manufacturing and petroleum, among others. Furthermore, aggregate demand, the labour market, the monetary and financial sectors, the informal financial sector and the external sector are examined in Part l which consists of seven chapters. Each chapter introduces the subject matter, analyses its importance and tries to provide a synthesis. Part 2 presents a model of the Nigerian economy. There are eighty-eight (88) equations. These equations are either behavioural or identities. The equations are an attempt to capture the realities of the Nigerian economy. Part 3 discusses the results of the estimated equations. Due to data problems, not all the equations are estimated.It is important to state that the model is highly aggregated. Hence, there is the need to further disaggregate the model. The problem, however, is the lack of data base to test the model.
A unique feature of this study is the effort to discuss and test the Nigerian informal financial sector. Several studies on the Nigerian economy have tended to assume the e0untry’s informal financial sector. In addition, the formal financial sector has been discussed and modelled. Other studies often subsume the financial sub-sector in the monetary sector. The results of our forecast/predictions indicated that economic fundamentals have not moved in the right direction. Policy simulation were conducted under pessimistic and optimistic scenarios. For example, by the year 2010, under the optimistic scenario, the economy will grow by 4.2% -this is below the projected 5.5% indicated in the 1998 Federal Budget. The industrial and agricultural sectors are to grow by 2.8% and 4% respectively at 3.0% per annum during the next 15 years. The prospects for drastically reducing unemployment and alleviating poverty by the year 2010 remain bleak. The challenge is that as we move into the 21st century, leaders and policy-makers must ensure proper management of the economy through continuous and proper fine-tuning. This study, therefore, provides the Ministry of Finance a benchmark for understanding the economy. It is anticipated that efforts will be made to regularly update the study.
Akpan H. Ekpo obtained a Ph. D. in Economics from the University of Pittsbough, Pittsbugh, Pennslyvania, USA. He was Professor of Economics, Anthony Ani Professor of Public Finance and Dean, Faculty of Social Sciences, University of Uyo, and currently the Vice-Chancellor, University Uyo, Uyo Akwa Ibom State, Nigeria.
John Udo E. Ndebbio obtained a Ph. D. in Economics from the University of Oklahoma, USA. He is currently Professor of Economics, University of Calabar, Calabar, Cross River State, Nigeria.
Edet Akpakpan received a Ph. D. in Economics from the University of Manchester, England. He had served as special Adviser (Economic Affairs), office of the Chief of General Staff, Abuja, and currently he is Senior Lecturer , Department of Economics, University of Port Harcourt, Rivers State, Nigeria.
Michael O. Nyong received a Ph. D. in Economics from the University of lbadan, Ibadan, Nigeria. He is presently Senior Lecturer, Department of Economics, University of Cal abar, Calabar, Nigeria.All were members of the Ministerial Advisory Committee in the Federal Ministry of Finance, Abuja. Akpan H. Ekpo chaired the Committee.