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
- Conceptual, Issues, Nature and Meaning of Debt Management 10
- 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
- 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
- Strategies Adopted so Far at Managing Nigeria External Debt 50
References 55
CHAPTER THREE
RESEARCH
METHODOLOGY
- Introduction 56
- Research Design 56
- Population of the Study 56
- Sampling Procedure 57
- Sample Size Determination 57
- 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
LIST OF FIGURES
Figure 2.1 Organizational Structure of Debt
Management Office (DMO) 15
Figure 4.1 Acceptance Region/Rejection Region 72
Figure 4.2 Acceptance Region/Rejection Region 75
Figure 4.3 Acceptance Region/Rejection Region 77
Figure 4.4 Acceptance Region/Rejection Region 79
LIST OF TABLES
Table 2.1 External Debt Outstanding By Creditor
Type and concessionality 25
Table 2.2 Key Facts 31
Table 2.3 Domestic Debts, Analyzed by Types of
Instruments and Holders 31
Table 2.4 Analysis According to Category of
Holders 32
Table 2.5 Summarily Indicators of Severity of
Debt Burden of Nigeria
in the Unfolding Twenty First Century 47
Table 2.6 Performance of Projects Financial by ICM Loan 49
Table 3.1 Population of the Respondents 56
Table 3.2 Sample Size Allocated to the Three Organizations 58
Table 4.1 Questionnaire Returned and not Returned 63
Table 4.2 Responses According to Sex 64
Table 4.3 Distribution According to Age 64
Table 4.4 Responses on Qualification 65
Table 4.5 Category of Job 65
Table 4.6 According to Years of Service 65
Table 4.7 Analysis of Question Item 7 66
Table 4.8 Analysis of Question Item 8 66
Table 4.9 Analysis of Question Item 9 67
Table 4.10 Analysis of Question Item 10 67
Table 4.11 Analysis of Question Item 11 67
Table 4.12 Analysis of Question Item 12 68
Table 4.13 Analysis of Question Item 13 68
Table 4.14 Analysis of Question Item 14 69
Table 4.15 Analysis of Question Item 15 69
Table 4.16 Analysis of Question Item 16 69
Table 4.17 Analysis of Question Item 17 70
Table 4.18 Analysis of Question Item 18 70
Table 4.19 Computation of Expected Frequency in Hypotheses One 71
Table 4.20 Computation of X2 for Hypotheses One 71
Table 4.21 Computation of Expected Frequency in Hypotheses Two 73
Table 4.22 Computation of X2 for Hypotheses Two 74
Table 4.23 Computation of Expected Frequency in Hypotheses Three 74
Table 4.24 Computation of X2 for Hypotheses Three 76
Table 4.25 Computation of Expected Frequency in Hypotheses Four 78
Table 4.26 Computation of X2 for Hypotheses Four 78
CHAPTER ONE
1.1 HISTORICAL
BACKGROUND OF THE STUDY
Debt
operationally, is defined as the Obligations owned by one country to another
country, denominated in either local and /or foreign currency only or in both,
comprising both domestic and external obligations (DMO,2002).
Debt management in Nigeria refers
to the technical as well as the institutional arrangements involved in
organizing both domestic and the external liabilities so that the debt service
burden is maintained/contained witching a sustainable level (Omoruyi,
1997:358).
Debt portfolio of Nigerian
government is usually the largest financial portfolio in a country. It often
contains complex financial structures and can create substantial balance sheet
risk for the government. Large and poorly structured debt portfolio also makes
governments move vulnerable to economic and financial shocks and have often
been a major factor in economic crisis (IMT, 2003:10).
Together with overall macroeconomic
policy debt management policy plays an important role in ensuring and
maintaining long-term debt sustainability.
Appreciating the significant role
that public debt management can play in helping countries or nations cope with
economic and financial shocks. The International Monetary and Financial
Committee (IMFC) has requested that
staff from the international Monetary Fund (IMF) and the World Bank Work
together in cooperation with national debt managements experts to develop a set
of guidelines on public debt management
to assist countries in their efforts to reduce financial vulnerability. The
IMFC’S request which was endorsed by
the financial stability forum in the
year 2000, was made as point of a search for board principles that could help
governments improve the quality of their policy frame works for managing the
effects of volatility in the international monetary and financial system,
meanwhile contrast to 15 to 20 years ago, countries are now much more focused on managing the
financial and operational risks inherent in their debt portfolio than was the
case in the past. And the way in which the stock of debt is managed is becoming
increasing sophisticated, especially in those countries levels or have
experienced shock associated with the removal of capital flows.
This
Institutional responsibilities for debt management vary from country to
country. In some countries, the ministry of finance is in charge of debt
management, while in others, debt management functions are shared by more than
one agency (the Central Bank and Ministry of finance for the most part). And in
others, all functions and activities of public debt management are charged to a
sole agency.
Since 1999, President Olusegun
Obasanjo has visited the world’s financial capital many times, se
