Economic Policy Options for a Prosperous Nigeria

447 Pages·2008·3.141 MB·English

by  Paul Collier, Chukwuma C. Soludo, Catherine Pattillo (eds.)

Economic Policy Options for
a Prosperous Nigeria
Edited by
Paul Collier, Chukwuma C. Soludo and
Catherine Pattillo
Economic Policy Options for a Prosperous Nigeria
This page intentionally left blank
Economic Policy Options for
a Prosperous Nigeria
Editedby
Paul Collier
Chukwuma C. Soludo
and
Catherine Pattillo
©PaulCollier,ChukwumaC.SoludoandtheInternationalMonetary
Fund2008
Allrightsreserved.Noreproduction,copyortransmissionofthis
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Firstpublished2008by
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10 9 8 7 6 5 4 3 2 1
17 16 15 14 13 12 11 10 09 08
Contents
Listof Tables vii
ListofFigures xi
Preface xiii
Acknowledgements xx
Introduction:TowardsEvidence-basedPolicy 1
PaulCollier,CatherinePattilloandChukwumaC.Soludo
SectionI:OilandtheMacroeconomy 11
1 BindingConstraintstoGrowthinNigeria 13
VictoriaKwakwa,AdeolaAdenikinju,PeterMousleyand
MavisOwusu-Gyamfi
2 Oil,GrowthandGovernanceinNigeria 45
PaulCollier
3 AddressingtheNaturalResourceCurse:AnIllustrationfromNigeria 61
XavierSala-i-MartinandArvindSubramanian
4 ModellingPolicyOptionsforNigeria:FiscalResponsibility,
MonetaryCredibility,andRegionalIntegration 93
XavierDebrun,PaulMassonandCatherinePattillo
5 MonetaryPolicyandOilPriceSurgesinNigeria 121
ChristopherAdamandBenediktGoderis
6 TradePolicy:ProspectsandChallenges 147
OlumuyiwaAlaba,AdeolaAdenikinjuandPaulCollier
7 EconomicGrowthandPolicyChoiceinNigeria:Lessonsfrom
theAsiaPacific 167
ObadiahMailafia
ManagingExtremeVolatilityforLong-runGrowth
DougAddison www.csae.ox.ac.uk/books
SectionII:Government:FiscalManagementwithina
FederalSystem 185
8 IssuesinFiscalPolicyManagementundertheEconomicReforms
(2003–7) 187
BrightOkoguandPhilipOsafo-Kwaako
v
vi Contents
9 TowardsSecuringFiscalPolicyCoordinationinNigeria 205
OluAjakaiye
10 FiscalFederalisminNigeria:Issues,ChallengesandAgenda
forReform 221
AkpanH.EkpoandAbwakuEnglama
StocktakingtheReformsinPublicFinancialManagement
MichaelL.O.StevensandLevM.Freinkman www.csae.ox.ac.uk/books
FiscalFederalism:FiscalDisciplineandServiceDeliveryinNigeria
FestusO.OdokoandOkwuJ.Nnanna www.csae.ox.ac.uk/books
SectionIII:FirmsandFarms:ThePolicyClimatefor
PrivateActivity 245
11 TowardsaMoreCompetitiveManufacturingSector 247
AdeelMalikandFrancisTeal
12 HowCompetitiveandEfficientareNigerianPorts? 275
OkechukwuGeorgeOjiandChukwumaAgu
13 Nigeria’sPowerSector:OpportunitiesandChallenges 301
PrasadV.S.N.TallapragadaandB.S.Adebusuyi
AgriculturalExportPotentialinNigeria
AdebiyiDaramola,SimeonEhui,EmmanuelUkejeandJohnMcIntire
www.csae.ox.ac.uk/books
SectionIV:TheWell-beingofHouseholds:Incomeand
Education 329
14 PovertyinNigeria 331
SimonAppleton,AndrewMcKayandBabatundeAdewumiAlayande
15 TheImpactofUniversalPrimaryEducationonSocio-economic
Outcomes:ANigerianExperiment 373
UnaOkonkwoOsili
16 FemaleSchoolingandWomen’sLabourMarketParticipationin
Nigeria 397
AdebayoB.Aromolaran
Index 429
List of Tables
1.1 Comparativeindicatorsofcompetitiveness 16
1.2 Nigeria:maincrops,areaharvested,productionandyield,
1999,2003and2004 16
1.3 Manufacturingvalueadded,1980–2005(%ofGDP) 16
1.4 Returnonassets(%)inselectedNigeriaformalmanufacturing
sectors 19
1.5 Productivityofinvestment–returns 19
1.6A Bankingsectorliquidity 22
1.6B Bankingsectorliquidity:cross-countrycomparison 22
1.7 Indicatorsoffinancialintermediationacrosscountries
(datafor2004–5) 23
1.8 Indicatorsofsizeandqualityofhumancapital 24
1.9 ComparativestructureofmanufacturinginNigeriaand
SSA1992and2002 26
1.10 Returnstoeducation 27
1.11 Commontaxadministrativecomplaints 34
1.12 Importclearancesequencefornon-EPZfirms 35
1.13 Contractenforcementindicators 37
3.1 Comparativeindicators 63
3.2 Growth,institutionsandnaturalresourcesinaggregate 67
3.3 Growth,institutionsandindividualnaturalresources 69
3.4 Growth,institutionsandnaturalresources:robustnessto
covariates 70
3.5 Growth,institutionsandnaturalresources:robustnessto
alternativemeasuresofinstitutions 71
3.6 Growth,institutionsandnaturalresources:robustnessto
influentialobservations,regionaldummies,sampleand
instrumentforinstitutions 72
3.7 Growth,institutionsandnaturalresources:maximizing
samplesize 73
3.8 Growth,institutionsandnaturalresources:isNigeriaunusual? 77
4.1 TheDMPmodelinanutshell(benchmarkcaseofdependent
centralbanks) 100
4.2 Inflationratesunderalternativemonetaryregimes 106
4.3 Publicspendingonhealthandinstitutionalquality 110
4.4 Expenditureonhealth:estimatesofresourcediversionandUFN 111
vii
viii ListofTables
4.5 WAMZmonetaryunion:netbenefitsforparticipants 113
4.6 ECOWASmonetaryunion:netbenefitsforparticipants 114
4.7 ECOWASmonetaryunion:netbenefitsforparticipants 116
4.8 Nigeria:alternativecalibrationsofUFN 116
5.1 Impulseresponsestoa12.5percentpositiveshocktooilprices 133
5.2 Standarddeviationsunderalternativefiscalandmonetaryrules:
responsestoa12.5percentshocktooilprices 140
5.3 Standarddeviationsandimpulseresponseswithbond
sterilization:responsestoa12.5percentshocktooilprices 142
5.A1 Modelcalibrationvalues 145
6.1 TheCommonExternalTariffStructure 157
6.2 MFNappliedtariffsforWestAfrica(2158–2004) 158
6.3 FinalMFNboundtariffs(%),WestAfricancountries 159
6.4 OfficialcheckpointsonselectedWestAfricanhighways,
December2000 160
6.5 StructureofECOWASeconomiesin2005(aspercentages
ofGDP) 161
6.6 Directionofchangeinimporttariffsduetotheadoptionof
ECOWASCET 163
6.7 ImpactofCETadoption 163
6.8 ChangesinoutputaftertheadoptionofECOWAStariffs(%) 164
7.1 GrosscapitalformationandgrosssavingsasaratiotoGDP 168
7.2 SectoralcontributiontoGDP 169
7.3 Percentageofchildrenperformingatorabovelevelof
mathematicalscalesbyage13years 175
7.4 Nigeria:selectedmacroeconomicindicators,2000–2005 177
8.1 Consolidatedgovernmentoperations 193
8.2 Selectedeconomicindicators 195
8.3 Totalpublicdebt(1999–2006) 196
9.1 StructureofFederationAccountRevenue,1999–2004 212
9.2 Summaryoffederalgovernmentfinances,1999–2004 213
9.3 Summaryofstategovernmentexpenditure,1999–2004 214
9.4 Summaryoflocalgovernmentfinances,1999–2004 214
10.1 AssignmentofexpenditureresponsibilitiesinNigeria 230
10.2 Dispositionofmajortaxpowersamongthethreetiersof
government 233
10.3 Nigeria:StateGovernments’Finances,2001–2005 236
10.4 Nigeria:LocalGovernments’Finances,2001–2005 237
11.1 Relianceonprivatelyprovidedelectricity 251
11.2 Supplyandreliabilityofutilities 252
11.3 Theproceduralbarrierstoinvestment 260
ListofTables ix
12.1 Globalcompetitivenessranking,2005and2006,shiftsin
positionamongAfricancountries 277
12.2 TEUofshipmenttoAfricabyregions 281
12.3 TEUofshipmenthandledbycountries 282
12.4 Documents,timeandcostofimportsandexportsinNigeria
andselectedregions 283
12.5 Regressionestimates(Nigerianresponses) 288
12.6 PortreformstoolkitandprogressinreformsinNigeria,
2003todate 291
13.1 Powersectorperformanceofsomedevelopingcountries 305
13.2 Unitsellingpriceofelectricity(kobo) 306
13.3 Systemlosses(%) 306
13.4 Statusofexistingpowergeneratingstationsonnationalgrid 308
13.5 PHCNpowergenerationprojectionsunderimplementation 309
13.6 NIPPpowergenerationprojectsunderimplementation 310
13.7 Statusofplannedmajorpowerprojects 311
13.8 Independentpowerprojectsbyindigenousandforeign
companiesunderimplementation 312
14.1 Evidenceonpovertyandinequalitytrends 336
14.2 Povertyindicators 340
14.3 Inequalityindicators 343
14.4 Modellingwelfareandpoverty 346
14.5 Simultaneousquantileregressionforlogwelfare 348
14.6 Effectofemploymentsectoronwelfareandpoverty 354
14.7 Summarycharacteristicsofearnings,disaggregatedby
employmentstatus 356
14.8 Estimatesofthepublic-privatesectorwagepremium
allowingfordifferentworkercharacteristics,inpercentage
points 358
14.9 Summaryearningsfrompublicandprivatesectorwage
employment,bysectorofemploymentandskilllevel 361
14.10a Quantileregressionresultsforcorrelatesoflogearnings:
publicsectorworkers 362
14.10b Quantileregressionresultsforcorrelatesoflogearnings:
privatesectorworkers 364
15.1 LandmarkeventsanduniversalprimaryeducationinNigeria 376
15.2 Federalcapitalfundsallocatedforprimaryschool
constructionin1976 379
15.3 Changesinschoolinginputs(statemeanswithstandard
deviationsinparentheses) 382
15.4 Summarystatisticsofthe1999NDHSdata 383