1.1 BACKGROUND TO THE STUDY
is a middle income, mixed economy and emerging market, with expanding
communications, technology and production sectors (Onuba, 2015). It is ranked
as the 21st largest economy in the world in terms of nominal GDP, and the 20th
largest in terms of Purchasing Power Parity. It is the largest economy in
Africa; its re-emergent, though currently underperforming, production and
manufacturing sector is the third-largest on the continent, and produces a
large proportion of goods and services for the West African sub-region. Nigeria
recently changed its economic analysis to account for rapidly growing
contributors to its GDP, such as telecommunications, local production etc.
economy is struggling to leverage the country's vast wealth in fossil fuels in
order to displace the poverty that affects about 33% of its population
(Olomola, 2007). Economists refer to the coexistence of vast wealth in natural
resources and extreme personal poverty in developing countries like Nigeria as
the "resource curse", although "resource curse" is more
widely understood to mean an abundance of natural resources which fuels
official corruption resulting in a violent competition for the resource by the
citizens of the nation (Olomola, 2007). This has led to massive
underdevelopment in every area including local production. There is no stable
electricity supply to drive any production, bad roads, multiple taxation and
host of other factors are militating against local production in Nigeria.
ability to compete with other nations is very vital for their survival as a
nation. Since their survival depends on their ability to provide basic goods
and services to the people, there is need to increase local production sectors
of economy. That notwithstanding, local production of a nation according to
Robert (1988), is the amount of output produced per unit of output of the
nation. Because labour is the most important input, the most popular factor to
be considered in local production is labour or output per hour of labour.
Udabah (1998) highlights that every developed country is very conscious of the
relationship between her level of local production and her ability to compete
with other developed countries in the world market for industrial products.
Again, it is obvious that in Nigeria, as in many other developing nations, low
level of local production contributed significantly to the economic problems.
In fact, one of the major characteristics of developing nation is low level of
local production which could lead to other problems like those of low income,
low savings, low investment and unemployment. Consequently it was observed by
Robert (1988) that the level of local production is determined by the unit of
output in the manufacturing sector. Low level of local production in a
particular country further shows itself not only in the high prices of
industrial products in the domestic market but also in the lack of
competitiveness in the international market.
a result of that, nations should be more productive in order to earn enough
foreign exchange to pay its imports, hence there is almost continues comparison
in levels of local production among the world’s great industrial nations. This
is for the simple reason that local production level determines the living
standards of the people and the degree of economic growth and development.
Economic growth depends on both the growth of resources and technological
progress. Advance in technology allow resources to be more productive. On the
other hand if the quantity of resources is growing and each resources is more
productive, then output grows even faster than the quantity of resources
(Sotubo, 2016). The amount that output grows because the labour force is
growing depends on how much labour contributes to the production of output.
this study on local production and its impact on the Nigeria economy will be
focused on the Cashew industry in Nigeria. Nigeria needs to increase its cashew
production capacity and export less of the raw commodity to other countries,
cashew exports from Nigeria generated N17.7 billion ($108 million) in 2013,
accounting for about 10 percent of the country's agricultural exports. Yet this
is just a fraction of the revenue generated by other countries that have more
capacity to add value to the raw product, and go on to export it to markets in
the European Union, the United States and the Middle East. Also, three main
cashew products are traded on the international market includes raw nuts,
cashew kernels and cashew nut shell liquid (CNSL). A fourth product, the cashew
apple is generally processed and consumed locally. The raw cashew nut is the
main commercial product of the cashew tree, though yields of the cashew apple
are eight to ten times the weight of the raw nuts. Raw nuts are either exported
or processed prior to export. Processing of the raw nuts releases the
by-product CNSL that has industrial and medicinal applications. The skin of the
nut is high in tannins and can be recovered and used in the tanning of hides.
The fruit of the cashew tree that surrounds the kernel can be made into a juice
with high vitamin C content and fermented to give a high proof spirit. However,
the researcher is of the opinion that increase in the production of cashew in
Nigeria will contribute significantly to the Nigeria economy based on the high
level of income that will be generated from the sales of the products.
1.2 STATEMENT OF THE PROBLEM
(1998) argued that Nigeria is among the 20 poorest countries in the world
despite its widely acknowledged huge economic potentials. It has been evident
that the widespread of poverty in Nigeria today remains the major challenge to
Nigeria’s development efforts. Prior to this, there is low level of local
production in Nigeria. By low level of local production, it mean that the
country is producing virtually nothing. Recently, the newly elected President
Muhamadu Buhari stated that the country has been importing every finished
product’s including toothpicks. However, the low level of investment in
agriculture and productions in Nigeria is quite worrisome.
speaking the lack of their skills also is often tied to lower level of
education is also a factor in local production. Additionally, it is important
to know that human capacity does not only includes study skills and knowledge
but also includes good health. Again, lack of human resources development is an
essential ingredient militating against local production and development in
less developed countries. Such underdeveloped countries lack people possessing
critical skill and knowledge required for all round growth and development of
the economy through the instrument of local production.
so, the most widespread obstacle to increase in local production manifest in
the developing countries is capital formation. This is as a result of the
vicious circle of poverty. In developing countries, the masses are poverty
ridden. Hence, they use outdated capital equipment and methods of production.
Nigerians practice subsistence farming of cashew, lack mobility and have little
connection with the market sector of the economy. These ugly development,
however decrease Nigeria’s level of local production. Therefore, the level of
local production of the nation is marginally low. The researcher is however
curious of ascertaining the impact of local production on the Nigeria economy
with emphasis on the cashew industry.
1.3 OBJECTIVES OF THE STUDY
following are the objectives of this study:
To examine the impact of local
production on the Nigerian economy.
To examine the effect of cashew
processing and production on the Nigeria economy.
To identify the factors limiting the
level of processing and production in Nigeria.
1.4 RESEARCH QUESTIONS
What is the impact of local production
on the Nigerian economy?
What is the effect of cashew
processing and production on the Nigeria economy?
What are the factors limiting the
level of processing and production in Nigeria?
There is no significant relationship between local production and Nigerian
There is significant relationship between local production and Nigerian economy
There is no significant relationship between cashew processing and production
and Nigerian economy
There is significant relationship between cashew processing and production and
1.6 SIGNIFICANCE OF THE STUDY
following are the significance of this study:
This study will be a useful guide for
the government of Nigeria and the policy makers in taking decisions that can
improve the economy of Nigeria through policies that will enhance local
production. This will invariably lead to higher local production which is good
for the economy.
This research will be a contribution
to the body of literature in the area of the local production and its impact on
the Nigeria economy, thereby constituting the empirical literature for future
research in the subject area
1.7 SCOPE/LIMITATIONS OF THE STUDY
study will cover the level of local production in Nigeria and its effect on the
economy of the nation between 1980 and 2014. This study will specially focus on
the Nigeria cashew industry
1.8 DEFINITION OF TERMS
the action of making or manufacturing from components or raw materials, or the
process of being so manufactured.
Belonging or relating to a particular area or neighborhood, typically
perform a series of mechanical or chemical operations on (something) in order
to change or preserve it.
the implements used in an operation or activity
the wealth and resources of a country or region, especially in terms of the
production and consumption of goods and services.