The Impact of Fiscal Policy on the Real Property Sector in Nigeria: 1980-2005
The vulnerable economic situation in Nigeria in the conduct of illicit activities due to precedent lingering and insurmountable poverty effectuated by precedent fiscal policy deregulation and fragile economic and financial regimes determine the need to maintain a sturdy fiscal policy infrastructure in Nigeria. The past three decades earmarking degenerating political and economic history in the region combined the remnant effects of armed conflict in the western African states that result to nonstate actors to regress illicit activity in the region and to undermine reconstruction efforts in the long term heighten the vulnerability levels to overcome peace and security in the area plagued by current and weak political and economic structural controls resulting to proliferate international money laundering despite cooperation efforts in the country (FinCen Advisory, 2002,p. 1). A research gap exists by which no link establishes the relevance between the historical aspect of fiscal and economic deficiencies in Nigeria back to the 1980s, then three decades henceforth, to the concurrent destabilization situation engaged in trenches where transnational money laundering activity proliferates. In the end a need arises that cater to implementing an invincible and sound economic and fiscal policy to overcome this insurmountable task due to the complexities associated to disposal of mechanisms under legitimate facilitation by international financial institutions, the wide scale deregulation of the financial industry in Nigeria that enabled excessive liquidity in financial instruments attribute to precautionary steps manifest in Basel II and III by imposing regulations to controlling liquidity and a stringent regulatory system that assess data quality, outsourcing and enhancement mechanisms to reflect information enlisting data sources from multiparty and third party feeds to ensure a compliance regime with utmost integrity for compliance. For example, to trace money laundering activities can associate with portfolios incorporating extensive amounts and exceptions (Accenture, n.d.,p2) This paper highlights the analysis that fill the relevance gap.
Historical facts attribute to the innate economic and political destabilization factors that determine the need to regress integrative governance of fiscal policy in Nigeria:
The economy relied heavily on the oil industry deriving revenue to the economic influx that account 80 percent of the gross domestic product. Attribute to this is the oil industry boom in the early 1970s by which derived a majority of oil resources within land area and the remaining from oil drilling in continental shelves resulting to at least 32 billion barrels. The exploitation level and the extent of volume of oil extraction could last for at least 38 years that generated unexpected wealth and reserves in the economy. Resulting investment in local urbanization in cities and leaving rural areas to develop curried unemployment and crime. Nigeria’s local currency, the Naira, before 1985 was stronger than the US dollar attribute to the trade influx greater than the outflow as well with foreign exchange and other capital reserves. Due to the saturation of this trade imbalance and persistent deficit not only in the oil sector resulted to full scale dependency of the nation on imports comprising to the extent basic commodities and food combined with the neglect to develop other economic based sectors in local settings, like agriculture, incited the Nigerian economy to decline with escalating debt, decreasing reserves and the decrease in oil prices in the international markets. This resulted to declining economic indicator indices. The repercussive effects of the boom attribute to culturally driven subversive immobility regime among citizens opposite to democratic practice and preference for economic development through a free enterprise and capitalism practice could function with overall priority through the effortless acquisition of wealth by availing riches in illicit ways and impose corruption practices within government levels among state and nonstate actors. The instant lure ingrained in the Nigerian culture to corruptive practices among engenders destabilizing mechanisms to suppress legalization in the country despite to a limited extent current post conflict reconstruction efforts have reached. This practice infers a fiscal policy formulation to resort to instinctive characteristics among the common population that revert back to the problem of parasitic interdependency with oil price movements relative to upstream or downstream performance regardless the effects these movements signify (Adedipe, 2004, p.3). Due to this mentality ingrained in the culture the oil industry dictated at large national economic policy structures. The key to policy reforms focuses on developing other commercial sectors other than oil and agriculture which the country is rich in that respect (Obi, 2007, p.33).
Another major problem centralizes around the immobility and sterility of economic indicator systems unsuccessful through the SAP system approach in 1986 that brought forth the need to establish a centralized and impartial macroeconomic policy structure to evade the concurrent incentive oriented cause. Economic indicators designed to follow proportionally to the reactions in social indicators did not respond appropriately to reform measures as others do in other economies. Research found the discrepancies in reform measures dominate over fiscal behavior that stagnate other requisite elements in the mobility of fiscal policy through income redistribution by establishing uniform economic concentration equality with new and existing businesses spurring throughout Nigeria audited under stringent compliance with the Central Bank of Nigeria imposing Basel II and III regulations to monitor anti-money laundering activities. Salient activation and participation among nongovernmental and community based organizations with government, national and local policymakers to educate with these initiatives are critical. The precedent uncontrolled levels of liquidity caused by the oil sector boom and the financial and banking deregulation on interest rates in 1991 by the Central Bank of Nigeria at extent attracting random sources and niches for investments regardless of location that spawn a new dawn to initiatives to illicit financial activities call for restrictive fiscal policy to monitor the likely recurrence which destabilizes amid current reconstruction efforts. Restoration of a restrictive regime in foreign currency reserves to amounts subject to a maximum limit should be imposed to revert to the needed excessive liquidity to strengthen local currencies impacted by oil prices which is the central revenue generator of revenues to the Nigerian economy. To restore an IMF policy model is critical to balance currency reserves and promote competition in a free market and capitalist enterprise through settlement of balance of payments in the midterm and achieving fiscal balance in debt financing, to revolutionize noninflationary growth in the medium and looming terms, and restructuring the economic base to diverse export markets, should prevail (The Nigerian economy, p.7).
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