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EFFECT OF POPULATION GROWTH ON DEMAND FOR IMPORTED CONSUMABLE GOODS IN NIGERIA’S ECONOMY (1981-2014)

ABSTRACT

This study examined effect of population growth on import demand in Nigeria, within the sample period of 1981-2014. The data for this research work (Gross Domestic Product, population and Exchange Rate) was obtained from the CBN Statistical Bulletin (2014) and analysed using ordinary least squares (OLS) technique. Gross domestic product was regressed against Population and Exchange Rate. Certain econometrics tests were conducted such as Unit Root test, Co integration test, and Vector Auto-Regressive Model. The result showed that Population and Exchange Rate had no effect on economic growth of Nigeria for the period under review.  The unit root test indicates that all the variables were stationary at first differencing. The Co integration test revealed that the variables had no long run relationship with economic growth of Nigeria within the sample period this necessitated the application of Vector Auto-Regressive, which revealed that exchange rate was not statistically significant. Also the R2was 0.89, showed that 89% of the changes in GDP was caused by changes in the explanatory variables. The f-statistics was statistically significant meaning that the explanatory variables had joint influence on GDP. The Durbin-Watson showed that there is no autocorrelation in the series. Base on this finding the research recommends among others that; government should embark on a family planning programme (FPP) and also try to use that means to enlighten the populace on the eminent danger of rapid population and its consequences on the economy.

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

Population in a developing country such as Nigeria is growing at a historical unprecedented rate. In the world over, the possible differences between number of people and world food production brings to resurrect the Malthusian hypothesis that long-run equilibrium consumption lies on higher than at the subsistence level. For individual countries or regions, the arithmetic observation that greater number of mouths to feed means lower consumption for each has won some supporters. More advanced views of the impacts of population growth on the age structures labour force, investment levels and social needs have also been formulated. Numbers of people and their rates of growth are said also to affect the military strength, world influence, territorial security, and mostly on the importation of consumable goods. Conversely, a large population supports greater specialization and a large increase in market return to human capital and knowledge. Hence, the link between greater population and economic growth depends on whether the incentives to human capital and expansion of knowledge are stronger than diminishing return to natural resources. The large population implies a large market for imported consumable goods and services as well as large pool of human resources for development. Although, the impact of population on development depends on the absolute size but also on its quality.

However, from the stand point of international trade, it is said that exports enriches a nation, while imports impoverish a nation and that for any nation to improve it’s wellbeing, it has to specialize in and export the relatively less expensive domestic goods that are relatively more expensive. This inter-dependency of nations in the international trade is a vital factor for economic progress of nations. Consequently, exploit are normally hampered in the developing country such as Nigeria due to the fact that Nigeria’s economy is based on petroleum, long hobbled by political instability, corruption and poor macroeconomic management is undergoing substantial economic reform under the new civilian administration. Nigeria leaders over the years failed to diversify the economy. The economy has over-dependence on the capital-intensive oil sector, which provides 20% of revenue. The largely subsistence agricultural sector has not kept up with rapid population growth. Now the debate triggered by the Malthusian hypothesis points to a lack of universal applicability of his paradigm because in industrial countries, technological advances have spurred increases in agricultural production, which ensures food security for the citizens. For those countries his predictions are somewhat neglected, whereas a large number of developing countries remain trapping under conditions capable of validating them.

The effort of governments in the developing countries to feed their people and also provide quality social services for them are being frustrated by rapid population growth. This growth is attributable on the one hand, improvement in human survival associated with the application of modern medical science to health matters, better sanitation and immunization of children, which have caused the death rate to decrease (Ashford 2001, United Nations, 2001). On the other hand, the traditional beliefs about the value of children particularly sons, as an asset to be relied upon by their parents in agricultural production and to support them during old age have combined with the practice of polygamy, the fear of child mortality and low level of female education to encourage high fertility. Moreover, the continuity of the peritoneal decent group and the influence of religions which teach that children are gift from God sharply limit the prospects for lowering the birth rate (for details, see Lee and Miller 1990, Renne 1995, Ainsworth 1996 and National population commission, 2003.

Consequently, the world population has been increasing and the last two decades haven been demographically unprecedented as it rose from 4.8 billion people in 1985 to 6. 4 billion in 2004. Much of this increase occurred in the developing nations as their populations grew from 3.7 billion to 5.1 billion as against that of developed nations which grew from 1.1 billion to 1.2 billion over the same period (United Nations, 2001b; population Reference Bureau, 2004). When it is noted that the high fertility countries are mainly resources constrained with low levels of social and economic development, it becomes obvious why they have accepted responsibility to control growth of their population through endorsement of family planning programmes mapped out at various international conferences organized by the United Nations (United Nations, 1998).

Nigeria is a high fertility country and there is evidence that it large population inhabits government’s effort in meeting the basic needs of the people. With a population that already exceeds 130 million people and growing at roughly 3 percent annually, (United Nations, 2004) a considerable proportion of the country’s resources is, doubtless, consumed instead of being accumulated as capital for development purposes. To that extent, the rate of development lags behinds that of population growth, which triggers stagnation in social service delivery. This necessarily impedes whatever progress being achieved in the fight against poverty. Nigerians is regarded as one of the country with the largest human population in African and popular regarded as the Giant of African for its population and the tenth in the world. These include the major sources, viz, the census and the world population data.

Nigeria has engaged in many censuses in its fifty six years of existence. Among many others, censuses were taken and restricted to only Lagos Island and part of the mainland in 1866, 1871 and 1896. Many urban towns were included in the censuses of 1911 and 1921. There were variations in the Northern and Southern protectorate as regards the census conducted. Though, the two were based mostly on estimates (NPC, 1998). No effort was made to conduct census in 1941 due to Second World War. This was conducted in 1952/53. It was elaborated but probably under enumerated the population of Nigeria. After the independent of Nigeria on 1st of October, 1960 census was carriedout in 1962,but was nullified and another one was conducted in 1963 (Ekanem, 1972). The result of this census was nullified by the Supreme Court in addition. The result of 1973 census was unacceptable (NPC, 1998). 1991 witnessed another census taking and Post Enumeration Survey (PES) in Nigeria. It was a successful attempt and it provided a robust set of socio-economic and demographic data for social and economic planning. The total population as at 1991 was 88,992,220, sixteen years later that was, in 2006 another headcount was conducted. The headcount revealed that the total population was more than 140 million.

1.2    STATEMENT OF THE PROBLEM

Since the second half of 1986 when the country embraced the implementation of trade liberalization, Nigeria had remained a leading importer of food items. This is inspite of the fact that about 65% of the total labour force was engaged in small–holder food production that contributes about 35% of the Gross Domestic Product (GDP). The major food items imported are rice, wheat, maize, or their products, sugar and dairy products, majority of which comes from the USA, EU, who are major actors in the Doha round and who grant subsidies to agricultural products and hinder market access to its agro-commodities from other developing countries – Nigeria inclusive. The cheap food imports reduce the market for domestic agricultural product and leave many farmers and workers in the agro-allied industries without source of income unless they are able to switch to more profitable production (Nyangito, 2003).

This implies that even if low cost food supplies are plentiful many may not be able to access them. The above position was further reinforced by rising trend of food prices in Nigeria. According to a survey by Central Bank of Nigeria (CBN), 2003, and the Federal Office of Statistics (FOS) the domestic producer prices of major food items have been on the rising trend since 1999. The increase in price was attributable to the increased cost of transportation occasioned by upward adjustments in the prices of petroleum products and to the deplorable state of infrastructural facilities, which increased the cost of evacuating farm produce to the markets. The price support programme of the Federal Government of Nigeria (Okuneye, 2001) pushed up prices by mopping up excess grains from the nation’s strategic grains reserve programe. The net effects of these have imposed a serious pressure on availability and access to food and thus causing food insecurity. This scenario could probably have been accentuated by the rising trend of foreign exchange, which tended to increase the prices of imported farm inputs. With the identification of cassava as another tradable product from Nigeria, Garri, an important staple food from cassava is becoming unavailable and inaccessible. The implication of these on food security is worthy of investigation In particular the relationship between population and import demand for consumable goods for close scrutiny.

Moreover, Nigeria had also turn to dumping ground for all kinds of imported consumable goods and our infant industries are subjected to serious competition with the foreign industries and therefore, the total output, income and investment are all reduced thereby bringing about an unavoidable increase in unemployment and poverty. Therefore, it is important to pay attention on population and all those that accompanied it and examine its impact on the demand for imported consumable goods in Nigeria. On a view to examine whether it is beneficial or not and to suggest how Nigeria economy can be improved.

1.3   RERSEARCH QUESTIONS

1. To what extent has population impacted on demand for imported consumable goods?

2. Do long-run relationship exist between population and demand for imported consumable goods?

1.4   OBJECTIVES OF THE STUDY

The major objectives are as follows

1. To empirically investigate the impact of population on Demand for imported consumable goods in Nigeria.

2. To ascertain the extent of long-run relationship existing between population and demand for imported consumable goods in Nigeria.

1.5     HYPOTHESIS OF THE STUDY

The hypothesis of the study are started below to guide the researcher.

Ho: Population do not have impact on demand for imported consumable goods in Nigeria economy

Ho: There is no long run relationship existing between population and demand for imported consumable goods.

1.6   SIGNIFICANCE OF THE STUDY

This study will help to change consumption patterns of foreign goods to indigenous goods. It will help to create sustainable development and a high living standard for all Nigerians. It will also serve as a guide to economic student for further research and those in the related field of study. It will also help to form appropriate device for right policy formations for solving economic problems.

1.7  SCOPES AND LIMITATIONS OF THE STUDY

The project covers all the facet of population on demand for imported consumable goods. The time frame of this project is 1981-2014 was chosen because it allows an analysis of the import of consumable goods and the impact population had on it. This study is basically restricted to the impact of population on demand for imported consumable goods on the Nigeria economy growth. The researcher was not able to gather all the necessary materials from all the secondary sources needed for the study. Also as a student still dependent.  She is limited by finance that would have ensured consistency. Combining the research with academic work was also not easy.

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