Nigeria, like many other African countries, was created from a multi-ethnic, socially and culturally diverse people, situated between the Equator and the tropic of cancer, its climate and vegetation can afford the growth of many tropical commodities such as cocoa, groundnuts, palm produce and rubber.
Starting from a low technological base after political independence in 1960, the country embarked on the arduous task of building a state with one identity by integrating the different ethnicities and transforming the barter economy into financial exchange economy. The country provided infrastructure and social amenities for a very young population. Over the years, policies were pursued in order to achieve the goal of a balanced national development that reflects the “Federal Character” of Nigeria.
Since independence, the search for a political system, which enhances stability for social and economic development, has been going on. In recent times, many developing countries have recognised that a market based economic system needs political institutions supportive of the free market concept. Thus Nigeria, like any other nation, has been involved in political engineering partly to achieve this goal.
Like many other African economies, the Nigerian economy has been mixed. However, the level of government participation has been reducing in line with globalisation trend and market base resource rationalisation concept. In this spirit, the Federal Government sold its shares in many firms and privatized and commercialised many other parastatals. The economy, including the capital market, was substantially deregulated.
It has been argued that the desire and pursuit of social and economic advancement are natural human instincts hence; man continuously seeks to improve his standard of living; a business organisation its profitability; and a nation, the wellbeing of its citizens, which undoubtedly is the prime essence of governance.
Contemporary economic doctrine states that the economic wellbeing of society is predicted not merely on national output growth, but more importantly on the state of development of its social and economic infrastructures, which directly impacts on the standard of living and life expectancy of the populace. In other words, to the development theorists, includes such issues as GDP growth, the state of healthcare, shelter, education, potable water, electricity, good road and telecommunication network.
These facilities must not only be sufficient; but they must be efficiently produced and managed to facilitate the industrialisation of a nation. The process of social and economic infrastructure, in turn requires heavy investment by both the public sector and private sector, which must see themselves as partners in the development process.
It is important to point out that investment in this context refers to the accumulation of real (physical) assets, which are vital in production process; as distinct from financial assets. Investment is widely regarded as one of the most essential elements in the industrialization process and ultimately in economic development. Evidently, countries with high private domestic investment tend to exhibit faster growth rate. This has been a key factor responsible for the spectacular growth, which has been witnessed in the East Asia. Indeed, without investment there can be no economic development.
A nation, however, cannot accumulate or maintain real assets without equally mobilizing capital (savings). Therefore, a country with high saving rate is very likely to record high investment level.
How then can savings be efficiently accumulated and channelled into productive investments? This is a question which administrators and policy makers are saddled with from time to time.
However, the answer could simply be by initiating and implementing policies, which would encourage investments and savings. It is generally accepted that...