Effect of Fiscal Policy on the Productivity of Quoted Manufacturing Companies in Nigeria
Chapter One
OBJECTIVE OF THE STUDY
This research work aims to examine the effect of fiscal policy on the productivity of quoted manufacturing companies in Nigeria with particular reference to Nigerian Breweries Plc. The general objective of this project work includes the following;
- To evaluate the effect of Federal government capital expenditure on the productivity of manufacturing companies.
- To examine the effect of interest rates on the productivity of manufacturing companies.
- To examine the effect of taxes on the productivity of manufacturing companies
CHAPTER TWO
REVIEW OF RELATED LITERATURE
EMPIRICAL REVIEW
Conventionally, fiscal policy implementation in every country is used to measure sustainable economic activities which manufacturing sector cannot be left out. Omitogun and Ayinla (2007) attempt to establish whether there is a link between fiscal policy and economic growth in Nigeria using the Solow growth model estimated with the use of ordinary least square (OLS) method. It was found that fiscal policy has not been effective in the area of promoting sustainable economic growth in Nigeria. This finding did not believe with Keynesian theory which is anchored on the need for an active policy to sustain economic growth. This is a research gap on the factors capable of hampering the effectiveness of fiscal policy. Dickson (2007) critically examine the recent trends and patterns in Nigeria’s industrial development using descriptive study. The study indicates that the level of manufacturing industry in Nigeria is concentrated in the southern part of the country and that the spatial pattern could change if industrialists adopt the strategy of industrial linkage. This finding did not support any school of thought as it suggests that policy on privatisation of industry in Nigeria should be enhanced. Ajayi (2008) in a study of the collapse of Nigeria’s manufacturing sector on economic growth. He used cross-sectional research design and found out that the main cause of collapse in the Nigerian manufacturing sector is low implementation of Nigerian budget especially in area of infrastructure. This means that low implementation of fiscal policy affects the level of growth in Nigerian manufacturing sector. Rasheed (2010) investigated the productivity in the Nigerian manufacturing subsector using co-integration and an error correction model. The study indicates the presence of a long-run equilibrium relationship index for manufacturing production, determinants of productivity, economic growth, interest rate spread, bank credit to the manufacturing subsector, inflation rates, foreign direct investment, exchange rate and quantity of graduate employment. This finding has research gap on the area of factors that affect manufacturing sector in Nigeria. Rina, Tony and Lukytawati (2010) examined the impact of fiscal and monetary policy on industry and growth of economy in Indonesian using the computable general equilibrium (CGE) model. It was found that fiscal and monetary policy have a positive impact on Indonesian macroeconomic performance in terms of change in GDP, investment, consumption and capital rate of return. This finding has research gap on the model used. This is because computable general equilibrium model is not a good model for correlation. Ogbole, Sonny and Isaac (2011) focussed on the comparative analysis of the impact of fiscal policy on economic activities in Nigeria during regulation and deregulation, using the econometric methods of co-integration and error correction model.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to effect of fiscal policy on the productivity of quoted manufacturing companies
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information effect of fiscal policy on the productivity of quoted manufacturing companies. 200 staff of Nigerian Breweries Plc, Lagos was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION5.1 Introduction
It is important to ascertain that the objective of this study was to ascertain effect of fiscal policy on the productivity of quoted manufacturing companies in Nigeria
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenge of effect of fiscal policy on the productivity of quoted manufacturing companies in Nigeria
Summary
This study was on effect of fiscal policy on the productivity of quoted manufacturing companies in Nigeria. Three objectives were raised which included: To evaluate the effect of Federal government capital expenditure on the productivity of manufacturing companies, to examine the effect of interest rates on the productivity of manufacturing companies, to examine the effect of taxes on the productivity of manufacturing companies. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Nigeria breweries plc, Lagos. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up shifting managers, human resource managers, production managers and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
In sum Government should encourage and maintain spending towards the manufacturing sector development and simultaneously develop the nation’s infrastructural facilities, in other to encourage domestic investors and win more foreign investors which are highly competitive globally. Government should also maintain her tax pattern because it is mild on investor and encourages output growth, however multiple tax system being practice in some quarters’ in country should be discouraged and eventually be discarded, this is because it is anti-productive and could lead to economic menace. On the other, loan to manufacturing sector and broad money supply should be encouraged and maintain in other to boost manufacturing productivity. In the same vein, a milder inflation would have a better result on manufacturing performance and this could be achieved through policy of inflation targeting.
Recommendation
The recommendations which are designed to promote confidence and sound investment climate among entrepreneurs include the following:
(1) Government is required to be sensitive to the variables in the tax environment and other macro-environmental factors so as to enable the manufacturing sector cope with the ever changing dynamics of the manufacturing environment.
(2) In view of the numerous findings made in this study, it is strongly recommended that the government should introduce measures to control indiscriminate tax extension often done, without recourse, to the inherent consequences on investment decisions.
(3) The study principally recommends that government fiscal policy should place greater emphasis on the principles of effective taxation, aimed at promoting industrial growth and attraction of foreign direct investment in Nigeria.
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