IMPACT OF TELECOMMUNICATION ON PRICE STABILITY IN NIGERIA



LITERATURE REVIEW

TELECOMMUNICATION IN NIGERIA
Telecommunications in Nigeria include radio, television, fixed and mobile telephones, and the Internet.

Radio stations:

Network of federal government-controlled national, regional, and state radio stations; roughly 40 state government-owned radio stations typically carry their own programs except for news broadcasts; about 20 private radio stations; transmissions of international broadcasters are available (2007) 83 AM, 36 FM, and 11 shortwave stations (2001). Radios: 23.5 million (1997).[dated info]


Television stations: nearly 70 federal government-controlled national and regional TV stations; all 36 states operate TV stations; several private TV stations operational; cable and satellite TV subscription services are available (2007).

Television sets: 56.9 million (2007).

Nigeria's media scene is one of the most vibrant in Africa. Because newspapers and television are relatively expensive and literacy levels low, radio remains the most important medium of mass communication and information. International broadcasters, including the BBC, are popular. TV viewing is concentrated in urban areas.[3][3]

The largest broadcasting companies are the government-owned Federal Radio Corporation of Nigeria (FRCN)[4] and the Nigerian Television Authority (NTA).[5] The NTA has two television services. One is NTA 1, which is distributed among NTA's six television zones. The other is NTA 2, which is distributed nationwide and is funded mostly by advertising. NITEL owns a majority of the transmitters that broadcast FRCN and NTA programming.[citation needed]

Each state also has a broadcasting company that broadcasts one or two locally operated terrestrial stations.[3] This means that there are about 50 government owned, but partly independent television stations. Private players in the Nigerian television scene include: Silverbird Television (STV),[6] Africa Independent Television (AIT),[7] Channels Television,[8] Superscreen Television,[9] and several others. Most of their programming is aimed for the African and global markets and is broadcast globally from Lagos, Abuja, Obosi and Port Harcourt centers with affiliated TV stations in several African countries. African Independent Television (AIT)[10] is a high profile satellite television station broadcasting globally from its Lagos and Abuja centers. Other direct satellite television stations with international reach operating in Nigeria are Murhi International Television, ON Television, Galaxy TV, TV Continental, etc. all in Lagos.[3]

There is general access to cable television[3] like DSTV,[11] a South African cable television station, broadcast over satellite. HiTV,[12] DaarSat,[7] StarTimes[13] and Infinity TV[14] are other examples of cable TV in Nigeria. M-Net ceased operations in December 2011, but had offices in most Nigerian cities, and was watched by a large number of people.[citation needed]

AN OVERVIEW OF NIGERIAN ECONOMY
Nigeria's economy is struggling to leverage the country's vast wealth in fossil fuels in order to displace the crushing poverty that affects about 57% of its population. 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. Nigeria's exports of oil and natural gas—at a time of peak prices—have enabled the country to post merchandise trade and current account surpluses in recent years.

Reportedly, 80% of Nigeria's energy revenues flow to the government, 16% cover operational costs, and the remaining 4% go to investors. However, the World Bank has estimated that as a result of corruption 80% of energy revenues benefit only 1% of the population. In 2005, Nigeria achieved a milestone agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the lenders will forgive most of the debt, and Nigeria will pay off the remainder with a portion of its energy revenues. Outside of the energy sector, Nigeria's economy is highly inefficient. Moreover, human capital is underdeveloped—Nigeria ranked 151 out of countries in the United Nations Development Index in 2004—and non-energy-related infrastructure is inadequate.

From 2003 to 2007, Nigeria attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of the NEEDS was to raise the country's standard of living through a variety of reforms, including macroeconomic stability, deregulation, liberalization, privatization, transparency, and accountability. The NEEDS addressed basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hoped that the NEEDS would create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).

A longer-term economic development program is the United Nations (UN)-sponsored National Millennium Goals for Nigeria. Under the program, which covers the years from 2000 to 2015, Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. In an update released in 2004, the UN found that Nigeria was making progress toward achieving several goals but was falling short on others. Specifically, Nigeria had advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing child and maternal mortality, and combating diseases such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and malaria.

A prerequisite for achieving many of these worthwhile objectives is curtailing endemic corruption, which stymies development and taints Nigeria's business environment. President Olusegun Obasanjo's campaign against corruption, which includes the arrest of officials accused of misdeeds and recovering stolen funds, has won praise from the World Bank. In September 2005, Nigeria, with the assistance of the World Bank, began to recover US$458 million of illicit funds that had been deposited in Swiss banks by the late military dictator Sani Abacha, who ruled Nigeria from 1993 to 1998. However, while broad-based progress has been slow, these efforts have begun to become evident in international surveys of corruption. In fact, Nigeria's ranking has consistently improved since 2001 ranking 147 out of 180 countries in Transparency International's 2007 Corruption Perceptions Index.

DEVELOPMENT OF THE NIGERIA MONEY MARKET AND ITS POSITIVE AND NEGATIVE IMPACTS
No money market existed in Nigeria before the establishment of the central bank of Nigeria (CBN) in 1958 via CBN act of 1958. This however not to say that money market for short – term funds did not exist before then. Before the advent of central bank of Nigeria (CBN) and commercial bank, existed some elements of short – term lending and borrowing. The market was an integral part of the London money market, it worked by involving funds from London to Nigeria during the season and in order to finance the export produce at the end of the season (Noko, 2011). The market comprising banks and other financial institutions such as discount houses, finance house etc. dealing in monetary assets. These markets have witnessed tremendous changes from start to date informing the numerous amendments of the CBN act to reflect the changing economic circumstances. Being largely responsible for implementing monetary policy in the country under the close watch of the CBN, institutions in the money market through their instruments and operations are the key to a monetary economy such as we have in Nigeria. These have implications for economic growth and development.

            The establishments of central bank of Nigeria as the apex regulatory authority of the financial sector of the country by CBN act of 1958. Although, the apex bank started operation in July 1959 with an initial capital of N17million naira. The banks function as enshrined in section 54 of the CBN Act 1958. The objectives of the CBN have remained largely unchanged to include:

·  To issue legal tender currency note coins in Nigeria

·  To act as lender of last resort

·  To maintain Nigeria’s external reserves to safeguard the value of the naira in international markets.

·  To promote and maintain monetary stability and a sound and efficient financial system.

·  To act as a banker and financial adviser to the federal government of Nigeria.

Hence, to achieve the above objectives, the CBN as part of its statutory functions formulates and implements the monetary policy through direct and indirect control techniques. Direct techniques like interest rate ceilings, administrative determination of interest rate, restriction of banks credit expansion, mandatory holding of government securities, and sectoral allocation of credit were abandoned when it was obvious that monetary resources were misallocated as price did not reflect their true value. Indirect techniques, which the CBN has adopted since SAP in 1986, rely on underlying demand for supply of monetary assets, targeting the balance sheet of deposit money banks. Adopting indirect control techniques involved regulating credit banks using the minimum anchor for all money market interest rates, to alter variations in the demand for and supply of monetary assets in the direction that is consistent with price stability.

Money market as the greatest CBN indirect monetary control instruments, comprising banks and non – banks institutions. These include:  

Commercial bank, merchant banks, development banks, discount houses, financial houses, primary mortgage institutions, insurance companies. They are operators in the money market in Nigeria, contributing to the allocation of monetary assets between economic units. Banks in a financial system performs intermediating rates by mobilizing role resources and channeling then to productive activities in the economy, thereby channeling productive resources from surplus sectors to the deficit sector, so, ensuring a more efficient resources allocation and utilization.

A measure of the performance of the banking sector lies in its ability to promote banking habit captured in the currency ratio (currency outside banks to broad money). Infact, as at May, June & July 2010, the currency ratio stood at 7.6%, 7.3% and &.4% respectively (CBN money and credit statistics, 2010). Banks major function however, is to mobilize saving to GDP ratio, at the prime of the market in 1960 the ratio was 1.96 percent, for 1970, it was 7.8 percent 1984, 11 percent in 1989.90 and grew to 13 percent as at 2007 (CBN statistical bulletine 2008).money market ensure the maintenance of equilibrium between the demand and supply of funds, hence it always equilibrate saving and investment in an economy. It ensures the application of economy in the use of cash.


EMPIRICAL LITERATURE OF MONEY MARKET ECONOMY: MONETARY POLICY
 The role of money market in any economy continue to enjoy debates, hence a number of studies have evolved over the years.  Money markets play a key role in banks liquidity management and the transmission of monetary policy (Rigg and Zibell, 2009). In normal times money markets are among the most liquid in the financial sector by providing the appropriate instrument and partners for liquidity trading, the money markets allows the refinancing of short and medium terms position which facilitates the mitigation of your business liquidity risk.

Among the leading studies on money market, its role in the economy is the research carried by Owoye and Onafawora (2007). Analyzing the relationship between money supply (M2), the stability of real money demand and effects of deviation of actual real Nigerian economy since the introduction of the Structural Adjustment Programme (SAP) in 1986 found that long – run relationship exists between the real (world) broad money supply, real GDP, inflation rate, domestic interest rate foreign interest rate, and expected exchange rate. Ezirim and Eneta (2006) while studying discount houses, the money market and the Nigeria economy, X – rayed the operations of discount houses in Nigeria economy in general.

They recognized the central roles which discount houses play in the open market operations of the central bank (central bank of Nigeria, 2004; Ezirim, 2005). From the inception discount houses in achieving their expected objectives could be made. For their study, they were particularly interested in analyzing the operations of discount housed to expose their relationship with the performance of the money market and the entire economy. They employed estimation and analysis of regression models in their investigation covering the period of 1993 to 2004, involving the 5 discount houses in Nigeria at the time.

The deponent variable in the study were the operational performance indices of the money market and the entire economy namely, the total value of the operations of the money market and the real gross domestic product (GDP) respectively. The independent variables were the operational performance indices of the discount houses, namely the discount houses shareholders’ funds and the discount assets. The researcher found a significant relationship of the independent and dependent variables. So, they rejected the null hypothesis of no significant relationship. They concluded that discount houses operations in Nigeria affect the Nigeria money market and economy both positively and significantly.

Ogunmuyiwa and Ekonne (2010) in studying the impact of money supply and economic growth between 1980 and 2006 found that aggregate money supply is positively  related to economic growth and development even through money supply does not have significant predictive power in predicting growth of real GDP.

In studying the Chinese macro – economy for the effects of money on price level and output, Chow and Shen (2004) in attempt to explain inflation from 1954 – 2002. Using vector auto – regression, they found that output react to money disturbances first, but for a short period and prices later but last longer to the Chinese economy. Trying out the vector – auto regression with data from the United States, they found a similar pattern of occurrences, confirming the proposition of tried man and its universality (Bermanke, 2003). They concluded that in spite of the institutional differences between China and the more developed economics, from which empirical evidence supporting freed man’s proposition was drawn, the same theory of inflation and of the effects of monetary disturbances on price and output applies.

Ajisafe and Foluronsho (2002), studied the relative effectiveness of monetary policy and fiscal policy on economic activity. The authors used annual series data for 1970 to 1998 from the central bank of Nigeria (CBN) statistical bulletin. They found from the result of their analyses that monetary rather than fiscal policy exerts a greater impact on economic activity in Nigeria, even though they found that both monetary and fiscal policies should be complimentary.

EFFECT AND IMPACT OF TELECOMMUNICATION ON PRICE STABILITY
The quantum development in the telecommunications industry all over the world is very rapid as one innovation replaces another in a mater of weeks. A major breakthrough is the wireless telephone system which comes in either fixed wireless lines or the global system for mobile communication (GSM) (Wojuade 2005). However, this section of the seminar tries to review related works of different scholars which are relev out to the topic of study (that is, “Telecommunication”). Automatic Number identification is a feature of telephone intelligent Network services which permits subscribers to display or capture the telephone number and geographical position of the calling parties when you are called, the number of the caller is shown on the receivers Mobile phones. The receiver has to decide either to answer the call or not.

The journey to success in Nigeria telecommunication milieu has been long and tortuous. Telecommunication facilities in, Nigeria were first establish 1886 by the colonial administration. At independence in 1969, with a population of  roughly 40 million p people. The country by then only had 18,724 phone lines for use. (J.O. Ajiboye 2007). This translated to a tele –densityt about 0. 5 telephone couper per 1,000   people. Between 1960 and 1985, the telecommunication sector consisted of the department of posts and telecom (pst) in charge of the internal network and a limit ed liability company, the Nigerian External telecommunication (NET) limited   responsible for the external telecommunication provide the getway to the outside world.


REFERENCES
"MTN". Mtnonline.com. Retrieved 10 November 2013.
"Africa.airtel". Ng.airtel.com. Retrieved 10 November 2013.
"Glo Mobile". Gloworld.com. Retrieved 10 November 2013.
Portal Service. "Etisalat Nigeria". Etisalat.com.ng. Retrieved 10 November 2013.
http://www.ncc.gov.ng/sim-registration/about-simreg.html[dead link]
"Nigeria - Key Statistics, Telecom Market and Regulatory Overviews", BuddeComm, 12 December 2013. Retrieved 22 February 2014.
Calculated using penetration rate and population data from "Countries and Areas Ranked by Population: 2012", Population data, International Programs, U.S. Census Bureau, retrieved 26 June 2013
"Percentage of Individuals using the Internet 2000-2012", International Telecommunications Union (Geneva), June 2013, retrieved 22 June 2013
"Fixed (wired)-broadband subscriptions per 100 inhabitants 2012", Dynamic Report, ITU ITC EYE, International Telecommunication Union. Retrieved on 29 June 2013.

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