AN EVALUATION OF THE EFFICACY OF THE DEBT CONVERSION SCHEME AS A STRATEGY FOR EXTERNAL DEBT MANAGEMENT IN NIGERIA.
AN EVALUATION OF THE EFFICACY OF THE DEBT CONVERSION SCHEME AS A STRATEGY FOR EXTERNAL DEBT MANAGEMENT IN NIGERIA.
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Date
2014-03-11
Authors
BINTUBE., WAZIRI MUSTAPHA
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Abstract
Debt Management primarily involves five basic functions: policy, regulatory, operational,
accounting and statistical analysis. The policy involves co-ordination among agencies with
prime responsibility for the economic management of a country in the formulation of
national debt policies and strategies. The regulatory aspect of debt management concerns
the establishment of a well defined institutional arrangement for recording and monitoring
all external debt, monitoring new debt incurred by domestic agents (public and private)
and the comprehensive recording of maturing debt. The accounting function requires
collecting detailed information on debt on a loan-by-loan basis and providing for an
efficient payment mechanism. The analytical aspect explores future structure of external
debt and options available.
Beyond academic interest, examining historical origins of the debt problem contributes to
greater understanding of its seriousness and the prospects and direction for its resolution.
The origin of Nigeria's external debt dates back to the pre-independence era. Sources
from the Federal Ministry of Finance indicate that Nigeria contracted her first loan from
the World Bank in 1958. The loan which was about USD 28 million went into extending
railway network. Generally the level of the country's debt remained relatively low until
the end of the oil boom years in 1977. The reverses in the country oil fortunes during the
glut years brought a lot of pressure on government finances and subsequently it became
absolutely necessary to borrow for balance of payment support.
This led to the first major borrowing from the International Capital Market(ICM) of USD
1 billion in 1978. Many more ICM loans were raised especially as funds from bilateral and
multilateral institutions became increasingly inadequate to the needs of government.
Consequently, ICM loan rose rapidly from USD 1 billion in 1978 to USD 5.5 billion in
1982. The single most insidious source of the increase was accumulated trade arrears
which emerged in 1982. A large part of the debt also came from credits granted between
1980 and 1983 when Nigeria experienced favourable exchange position. Most of the
loans were used to finance social white elephant projects while some never got into the
country.
Description
A PROJECT SUBMITTED TO THE POST GRADUATE
SCHOOL, AHMADU BELLO UNIVERSITY ZARIA IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF MASTER OF BUSINESS
ADMINISTRATION DEGREE, (MBA).
Keywords
EVALUATION,, EFFICACY,, DEBT,, CONVERSION,, SCHEME., STRATEGY,, EXTERNAL,, MANAGEMENT,, NIGERIA.