Showing posts with label ECONOMY. Show all posts
Showing posts with label ECONOMY. Show all posts

Monday, 18 June 2018

TREATMENT OF MONEY MANAGEMENT

Introduction
Money is an important material resource. Which we use to purchase most of the goods and services we use. The amount of satisfaction we get from our money management is an organized process of allocating or using money to achieve specified goals (needs that are usually purchased with money. We cannot discuss money management without mentioning income, budgeting and savings. They are important aspects of money management.

Principles Of Money Management
The following principles should guide us in managing our money
  1. Expenditure must never exceed income. Ensure that your expenditure is within the limit of your income.
  2. Allowances should be made for emergencies that may come.
  3. Make a budget on how to use money available
  4. Separate your needs and goals in order of importance so that the most important should be given priority.
Guidelines Of Money Management
  1. Identify family goals e.g. providing education for the children, owning a house or buying a car, etc.
  2. Establish priorities. Here, the family should determine which objective or goal is most important or needs to be started early so as to yield interest as the family financial need increases.
  3. Estimates the cost of goals. The family should list goals, rank them, and tag the cost. For instance, if a person’s goal is to own a house that costs N60, 000 after five years of service, it means that the person should save at least at N1000 monthly for five years.
  4. Analyse the financial resources. The family should examine carefully all sources of family treasury for use in reaching family goals. For salaried workers with regular employment, money income is usually predictable over a lifetime. For those with irregular incomes and uncertain employment, planning is both more difficult and more necessary.
  5. Formulate a plan of action. Once the desired life style and goals of a family are established and current financial resources have been calculated the approach will need to be streamlined. In order words, a budget showing family need and the corresponding proportion of income to each need is made.
The budget could be monthly or yearly as the case may be.
  1. Organize all efforts. This involves taking decisions about who is to keep the records. What kind of checking account is to be used when banking, timing of purchases and what kinds of records to keep.
  2. Control activities: income should be channelled to planned objectives or goals and should not be wasted. For instance comparative buying should be used when making purchases to select durable and useful items for the family.
  3. Keep adequate records. All income and expenditure should be properly recorded. For instance, when properly or a home is purchased, cheques receipt and records relating to the property through the years should be kept until the property is sold. This practice could save money at tax returns.
  4. Evaluate regulatory families should check the effectiveness of their financial should be abandoned or revised. Expenditure should be adjusted to changes in income and goals.

Importance Of Budget
Family budget is important because of the following reasons:
  1. It serves as a guide in spending
  2. It helps to plan income within the limits of expenditure
  3. It helps to cater for the needs of every member of the family.
  4. It prevents unnecessary spending and promotes peace, security and stability in the family.
  5. It helps the family to see and access their spending patterns and to adjust properly.
  6. It helps to prevent the children and other members of the family on how to spend wisely.
  7. It helps to prevent impulse buying (buying things not planned for)
  8. It helps to accomplish a long term plan of difficult ventures.
  9. It helps to apportion the available income adequately to cater for both primary and secondary needs.
Factors That Influence Family Budget
The family budget is influenced by many factors such as the following:
  • Income
  • Occupation
  • Composition of family members
  • Locality
  • Family values
  • Season of the year
  • Inflation
  • Family future plans
A budget is the plan for the future expenditure of a given household or an individual. It is a useful devise that can help a family to achieve their goal. Budgeting is the first step in money management.
Steps In Making A Family Budget
According to Gross and Crandall (1963) the following steps are involved in making a budget.
  1. List all the commodities and services needed and wanted by family members throughout the proposed budget period.
  2. Estimate the cost of the needs or desired items
  3. Estimate the total expenditure for the planed period
  4. Bring expected income and expenditure
  5. Check the budget to ensure that it has a reasonable chance of success
Benefit Of Budgeting
  1. Budgeting enables the family to take an overview of the use of their income that is expenditure can be seen in perspective
  2. It can help avoid the use of limited family money for items to prevent impulsive buying
  3. A budget determines the use of other resources indirectly
  4. It enables the family to make decisions as to what to purchase

Thursday, 14 June 2018

INFLATION DROPS FOR 16TH CONSECUTIVE MONTH TO 11.61%


Inflation has dropped for 16th consecutive month to 11.61%. National Bureau of Statistics on Wednesday said the Consumer Price Index, which measures inflation rate, dropped by 0.87 percentage points from 13.34 in April to 11.61 in May. The bureau said this in the CPI report, which was made available to journalists in Abuja. It said this was the 16th consecutive month that the index would be recording continuous decline.

The report read in part, “The Consumer Price Index, which measures inflation, increased by 11.61 per cent year-on-year in May 2018. “This is 0.87 per cent points less than the 13.34 per cent recorded in April, and represents the sixteenth consecutive disinflation since January 2017.” The NBS report further stated that the urban inflation rate dropped to 12.08 per cent year-on-year in May from 12.89 per cent recorded in April, while the rural inflation rate also dropped to 11.20 per cent in May from 12.13 per cent in April.

On month-on-month basis, the report noted that the urban index rose to 1.1 per cent in May from 0.85 per cent in April, while the rural index also rose to 1.08 per cent in May from the 0.82 per cent recorded in April. The report stated that in May, inflation was highest in Kebbi (14.65 per cent), Yobe (13.68 per cent) and Jigawa (13.62 per cent).

Monday, 11 June 2018

MOROCCO AND NIGERIA SIGNED AGREEMENTS ON REGIONAL GAS PIPELINE


Shehu said the signing of the agreements, witnessed by Buhari and the King of Morocco, Mohammed V1, followed a meeting between the two African leaders. The meeting, he disclosed, focused on strengthening economic relations in gas resource development, global investments, and agricultural training and management.

They also signed a Memorandum of Understanding for the development of a chemical plant in Nigeria for producing ammonia and its derivatives. They signed a cooperation agreement on vocational training and technical supervision, which will enhance skills on better management of agricultural outfits in Nigeria.

The Federal Government and the Kingdom of Morocco on Monday in Rabat, Morocco, signed three agreements as part of activities marking President Muhammadu Buhari’s two-day visit to the country. According to a statement by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, the agreements included that of a regional gas pipeline that would see Nigeria providing gas to countries in the West African sub-region that extends to Morocco and Europe.



Sunday, 3 June 2018

TREATMENT OF CAPITAL AND STOCK EXCHANGE MARKET

CAPITAL MARKET
This is a financial market for trading in long-term financial assets. It is a market for long-term loans and investments. It consists of people and organization who wish to lend out money or to borrow on a long-term basis. Financial institutions which operate in the capital market are:-
(1)    Development bank
(2)    Insurance companies
(3)    Investment banks
(4)    Mortgage bank
(5)    The stock exchange
Instruments used in the money market
(1)    Shares
(2)    Development stocks
(3)    Government bonds
(4)    Company bonds
Functions or advantages of capital market
(1)  Provision of capital for permanent long-term investments in industry and commerce
(2)  Provision of long-term investment opportunities for people and organization
(3) Provision of managerial, technical and financial advice to investors
OTHER AGENCIES THAT CAN ACCESS CAPITAL MARKET
Second-Tier Securities Market:- it was established in April 1985 to encourage small and medium-scale enterprises to avail themselves of the resources of the stock market by making listing requirements and conditions less stringent for this category of enterprises. The aim is to increase the volume of security in the market.
THE STOCK EXCHANGE MARKET
The stock exchange market is a market which deals with the buying and selling of long term financial asset (securities) such as stock and shares e.g. The Nigerian Stock Exchange (formerly the Lagos Stock Exchange) was established in 1960.
DEALERS IN THE STOCK EXCHANGE
On the stock exchange, there are two main dealers: The stock Brokers and The Jobbers.The brokers deal directly with the public. They act as their agents who buy and sell securities on their behalf and offer them advice. They charge a commission for their functions.The Jobber is the main dealer at the stock exchange. He does not deal directly with the public but with brokers. The broker requests the jobber for his price for a particular security. He quotes two prices- a high price for selling and a lower price for buying. His profit is known as ‘the jobber turn’ i.e. the difference between his selling and buying price
FUNCTIONS OF THE STOCK EXCHANGE
(1) Raising of long term capital investment
(2) Easy marketing of long  term securities
(3) Protection of the public against fraud
(4) Offering investment opportunities
(5) It acts as a barometer for measuring the economic performance
(6) Stabilization of prices of securities

Thursday, 31 May 2018

NEW MINIMUM WAGE TO LEGITIMISE POVERTY IN SOUTH AFRICA

South Africa Federation of Trade Unions (Saftu) said it is outraged and disgusted - but not surprised - by the passing of the minimum wage bill, which was overwhelmingly endorsed by parliament on Tuesday.

The South African trade union has accused the government of "legitimising poverty" after the country set its first-ever minimum wage.

The bill sets the wage at a minimum of 20 rand ($1.59; £1.20) an hour, which, for a 40-hour week, sets the wage at about $278 per month.

The union said parliament missed an opportunity to free workers from the oppressive wage gap.

In 2016, a commission led by President Cyril Ramaphosa - who was deputy president at the time - found almost 50% of employed South Africans earned less than the proposed national minimum wage.

The other trade union federation Cosatu, which has formed an alliance with the government, has endorsed the proposal. The bill will have to be sent to parliament’s upper house before it can be signed into law by President Ramaphosa.
The government said it hoped the new guideline would improve the lives of the lowest-paid workers in the labour market and alleviate poverty and inequality. The wage bill will cover about 75% of farm workers and domestic workers.

Wednesday, 30 May 2018

EFCC WON'T STOP THE ALLEGED CORRUPTION CASE INVOLVING MR ORJI KALU


In January, A legal practitioner, Kingsley Ekwem, declined to testify as a prosecution witness in the trial of the former governor and two others over an alleged N3.2billion fraud. Kalu has defected from the Peoples Democratic Party (PDP) to the All Progressives Congress (APC), while members of the opposition party have continued to accuse the APC government of a one-sided anti-corruption war.


The spokesperson for the commission, Mr Wilson Uwujaren, said on Tuesday during his appearance on Channels Forum, a Channels Television programme which brings opinion leaders and policymakers together to discuss and find solutions to Nigeria’s problems. The EFCC had charged Mr Kalu with fraud allegations running into billions of naira when he served as governor of Abia State.

The Economic and Financial Crimes Commission (EFCC) has insisted that the fact that a former governor of Abia State, Mr Orji Kalu, changed his political party won’t stop the alleged corruption case involving him.



Tuesday, 29 May 2018

ITALY POLITICAL CRISIS HITS STOCK MARKETS

The sell-off in Italian bonds deepened, with the yield on two-year debt breaking through the 2% barrier. The yield on the bond is set for its biggest one-day jump in 26 years.

Movements in bond prices are important as they affect the cost of borrowing for the government. Italy's debt currently stands at 130% of its economic output.

European financial markets have been hit by political upheaval in Italy. The prospect of elections as early as September, along with the possibility of eurosceptic parties strengthening their position, has hit markets. Italy's benchmark FTSE MIB sank 2.7%.

The UK's FTSE was down 1.2%, Germany's Dax down 1.3%, and France's Cac down 2%.

The bond sell-off hit the share price of Italian banks exposed to government debt, with Intesa Sanpaolo, BPER Banca, Unicredit and UBI Banca falling sharply.

Meanwhile, the pan-European Stoxx 600 fell 1.6%, with banks the worst-performing shares, and the euro fell against the dollar and pound.

Wednesday, 23 May 2018

MANUFACTURING AND SERVICE INDUSTRIES

Manufacturing is the process of transforming raw into useable form to create maximum utility. ( Adewale Osunsakin, 2018). More so, it has been argued that the fastest trend through which a nation can achieve sustainable economic growth and development is neither by the level of its endowed material resources, nor that of its vast human resources, but technological innovation, enterprise development and industrial capacity. For instance, despite its poor natural resources, and the hurdles it faced from 1920s chronic inflation, Germany has effectively exploited the manufacturing sector and rose up to become the largest economy in Europe and the fourth largest in the world.

In the modern world, manufacturing sector is regarded as a basis for determining a nation's economic efficiency (Amakom, 2012). However, after the discovery of crude oil in Nigeria in the late 1950s, the nation has shifted from its preeminent developing industrial production base and placed heavy weight on crude oil production (Englama, et al. 2010); not only has this jeopardized its economic activities, it also aggravated the nation's level of unemployment. Nigeria as a giant of Africa has for long been regarded as a nation blessed with abundant human and material resources; however, the underutilization of these potentials has amplified widespread poverty, low standard of living at individual level and rising unemployment in the country as a result of incessant mono-economic practice and drastic neglect of other sectors of the economy such as agriculture, tourism, mining and the manufacturing industry.

In spite of the country's vast oil wealth, the World Bank Development Indicators (2012) has shown that majority of Nigerians are poor with 84.5 percent of the population living on less than two dollar a day. The United Nations Human Development Index (2011) also ranks Nigeria 156 out of 179 countries, which is a significant decrease in its human development ranking of 151 in 2004; and World Bank Development Indicators (2012) have placed Nigeria within the 47 poorest countries of the world. The issue of poverty can be easily traced to mono-economic practice and underutilization of the nation’s endowed resources, especially in manufacturing sector, which could have opened up windows of opportunity in job creation and economic development.

Putting the country back on the path of recovery and growth will require urgently rebuilding deteriorated infrastructure and making more goods and services available to the citizenry at affordable prices. This would imply a quantum leap in output of goods and services. Ogbu (2012) states that no other sector is more important than manufacturing in developing an economy, providing quality employment and wages and reducing poverty. Increasing productivity should be the focus because many other countries that have found themselves in the same predicaments have resolved them through productivity enhancement schemes. For instance, Japan from the end of the World War II and the United States of America from the 1970s have made high productivity the Centre point of their economic planning and the results have been resounding. Also, middle income countries like Hong Kong, South Korea, Singapore and India have embraced boosting productivity schemes as an integral part of their national planning and today they have made significant in roads into the world industrial markets.

Given the importance of high productivity in boosting economic growth and the standards of living of the people, it is necessary to evaluate the role and performance of the Nigerian manufacturing sector. In the light of the foregoing, there cannot be another appropriate time to evaluate the role of the Nigerian manufacturing sector in the economic growth and the development of the country than now.
PROBLEMS CONFRONTING MANUFACTURING IN NIGERIA
The history of industrial development and manufacturing in Nigeria is a classic illustration of how a nation could neglect a vital sector through policy inconsistencies and distractions attributable to the discovery of oil (Adeola, 2005). However, Ogbu (2012) argues that the country’s oil industry is not a major source of employment, and its benefit to the other sectors in the economy is limited since the government has not adequately developed the capacity to pursue the more value-added activities of the petrochemical value chain. As a result, the oil industry does not allow for any agglomeration or technological spillover effects, Ogbu (2012) stresses.

From a modest 4.8% in 1960, manufacturing contribution to GDP increased to 7.2% in 1970 and to 7.4% in 1975. In 1980 it declined to 5.4%, but then surged to a record high of 10.7% in 1985. By 1990, the share of manufacturing in GDP stood at 8.1% but fell to 7.9% in 1992; 6.7% in 1995 and fell further to 6.3% in 1997. As at 2001 the share of manufacturing in GDP dropped to 3.4% from 6.2% in 2000. However, it increased to 4.16% in 2011 which is less than what it was in 1960. Currently, Nigeria’s manufacturing sector’s share in the Gross Domestic Product (GDP) remains minuscule (CBN, 2011). Compare that to the strong manufacturing sectors in other emerging economies, where structural change has already occurred and where millions have been lifted out of poverty as a result: manufacturing contributes 20 percent of GDP in Brazil, 34 percent in China, 30 percent in Malaysia, 35 percent in Thailand and 28 percent in Indonesia (Ogbu, 2012). The more recent experiences of the East and Southeast Asian economic transformations demonstrate that diversification into manufacturing and industrial production facilitated by what Arthur Lewis calls the “intelligent governments” are critical to poverty reduction.

However, Nigeria has no effective industrial policy that promotes manufacturing; at least not in the sense of policy which provides practical solutions to the difficulties encountered by incipient entrepreneurs or emerging manufacturing firms.

SIGNIFICANCE  OF MANUFACTURING INDUSTRY
Industrial activities help in solving the basic problems of unemployment, inflation, budget deficit and general economic disequilibrium. It assists to implement the policies of the government that have been directed towards the improvement of local production. It will reduce the continued pressure on balance of payment in spite of the various policy measures taken so far to address the situation.

SERVICE INDUSTRIES
The service industries (More formally termed: 'tertiary sector of industry' by economists) involve the provision of services to businesses as well as final consumers. Such, therefore, include accounting, tradesmanship (like mechanic or plumber services), computer services, restaurants, tourism, etc. Hence, a service Industry is one where no goods are produced whereas primary industries are those that extract minerals, oil etc. from the ground and secondary industries are those that manufacture products, including builders, but not remodeling contractors.
List of service industries
(1)    Tourism
(2)    Transport
(3)    Banking
(4)    Insurance
(5)    Warehousing
(6)    Advertisement

Monday, 21 May 2018

TREATMENT OF INTERNATIONAL TRADE & COMPARATIVE COST ADVANTAGE

Domestic Trade and International Trade
Domestic or Internal Trade or Home Trade or Home Trade involve the exchange of goods and services among the residents of a country. It includes all trading/selling and buying activities of all types within a particular country. International trade or External trade or foreign trade involves the exchange of goods and services between two or more countries. It is trade among nation, i.e between Nigeria and other countries. People firms, government and agencies exchange goods and services across international boundaries.
International trade can be:-
*Bilateral-trade involving exchange of goods and services among two countries. Each country balances its payments and receipt with each other.
*Multilateral-trade in which a country exchanges goods and services with many other countries.

Similarities Between International Trade And Internal Trade
(1)Both trades involve the use of money as a medium of exchange
(2)Both have to do with some degree of specialization between the trading partners which is the basis of exchange.
(3)Both trades involves the buying and selling of goods and services.
(4)Both trades arise from inequitable distribution of natural endowments and production resources.   
(5)Both trades involve the activities of middle men.

Differences Between International Trade And Internal Trade (1)While International trade takes place across national boundaries, internal trade takes place within the borders of a country.
(2)Internal trade uses local or national currency whereas different currencies are used in foreign trade.
(3)There is no restriction for home trade while foreign trade can be restricted by import/export duties, tariffs, embargoed
(4)International trade is a foreign exchange earner while home trade only generates internal revenue.
(5)Factors of production are freely mobile in home trade, but there are restrictions for such in international trade. e.g labour mobility is subject to immigration laws among countries.(6)Barriers of distance, transport costs are greater in foreign trade than in home trade.
(7)The problems of foreign exchange and balance of payments are peculiar to foreign trade while internal trade has no such problems.
   
Reasons/ Basis For International Trade
International trade arose from the international specialization and division of labour. These have to be for the following reasons:
1. Uneven distribution or endowment in natural resources of nations such as      minerals. For instance, Nigeria has coal and crude oil; Ghana is endowed with bauxite while Canada is enriched with nickel.
2. Differences in climate and soil which gives rise to the cultivation of different crops.
3. Differences in capital stock which determines the quantity and variety of goods and services each country will be able to produce.
4. Differences in labour skills:There are variations in the volume and quality of labour for productive activities.
5. Differences in technology: Countries advanced in technology can produce more industrial goods than others. E.g. Japan is good in electronic goods; Germany is good in Mercedez Benz cars, Switzerland in watches and China in a variety of items.
6. International trade takes place because no country has attained self sufficiency. For instance Nigeria imports cars, radio, watches etc from Japan while Japan gets Nigeria’s petroleum. The desire to satisfy wants each country cannot produce calls for exchange across countries.
7. The need to create a wider market for a nation’s goods and services is another reason for international trade.
8. International trade is also based on the premises that the cost of production of a commodity differs from one country to another. So a country will choose to import a good if it is cheaper to do so than to produce it.
9. Internal trade is also engaged in because of the desire of nations to improve the standard of living of their citizens.
Barriers to International Trade
There are problems besetting trade among nations. These includes
1.Differences in currency
2.Natural barriers of distance, seas, deserts, etc
3.Differences in language
4.Trade restrictions by some nations
5.Long and sometimes difficult processing of documents for foreign trade
6.Hindrance from political ideologies of different countries
7.Differences in units of weights and measures

Advantages or Merits of International Trade
1.It is a source of revenue for nations
2.It leads to increase in total world output of goods and services
3.It provides a wider market for goods
4.It enhances better standard of living in many nations.
5.It promotes interdependence among nations which is a prospect for world peace and international goodwill
6.It provides employment opportunities for exporters and importers
7.It leads to a more efficient allocation of world productive resources
8.It promote specialization, division of labour and efficiency in production
9.It enhances world economic growth   and social progress
10.It leads to increased foreign investments in West African nations
11.It puts in check private monopoly power as importation of goods makes room for competition.

Disadvantages or Demerits of International Trade
Inspite of its numerous advantages, there are some shortcomings of international trade. These are:
1.It may lead to overdependence on other countries
2.It negatively affects the growth of infant industries
3.It negatively impacts on the cultural and moral values of a country and leads to decadence in social norms (e.g. indecent and immoral fashions imports into Nigeria)
4.It can reduce the efforts of a nation towards attaining self-sufficiency.
5.It can generate unemployment as high importation may reduce the level of production of domestic industries.
6.Unrestricted foreign trade may lead to balance of payment deficit i.e when import is higher than import.
7.It makes less developed countries become dumping grounds for all kinds of goods including dangerous and harmful ones such as arms and ammunitions and alcohols.

The Principle Of Comparative Cost Advantages
The law or theory or principle of comparative cost advantage state that a country will be better of, if it specializes in the production of commodities in which it has the greatest comparative cost advantage over others and exchange them for commodities in which it has comparative cost disadvantage.
This law is based on the premises of the law of opportunity cost. A country is said to have comparative advantage over others in the production of a commodity in which it has the lowest opportunity cost than others. The real cost of production in terms of the alternative goods forgone is used in comparison with that of other nations.The principle operates on some basic assumptions that:
1.There are only two trading countries
2.Only two items are produced
3.There is free flow and mobility of factors of production
4.There is no balance of trade between the two countries
5.There is no transport cost
6.Technology and costs are constant
7.Labour is the only factor of production

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