Finance for growth and policy options for emerging and developing economies: Nigeria.

Abstract

The analysis in the paper clearly revealed that finance is important for a sustainable economic growth. It also shows that financial policies designed in various EME countries had the main aim of making the financial system provide financial functions. However, there are large differences in how well the financial system in each country performed these functions. Also, it is well noted that what matters to economic growth is access to financial services and not who supplies them, whether it is private sector as in South Africa and Nigeria or the combination of public and private sectors as in China. The financial policy in Nigeria has not been able to achieve the desired result in providing financial services. The country has not experienced a remarkable economic growth like other EMEs. It has very weak money and capital markets that can perform the role of mobilising savings and financial intermediation. The private sector is weak and there is an unhealthy competition between the private and public sectors in terms of access to bank credits. The country fails in attracting appropriate FDI and shows a remarkable performance in terms of remittance that is very difficult to channel to investment ventures. All these challenges are attributed to weak and unstable banking system, high lending rate coupled with wide interest rate gap and fiscal misalignment of the public sector.