ABSTRACT
Global economic recession has micro and macro effects on all sectors of
a country’s economy. The study examined economic recession and human capital
development in Nigeria. The training and development of university lecturers in
Ogun East Central District were related to the human capital development. The
study adopted the research survey design approach and the simple random
sampling technique was used to select 77 academic staffs in different positions
and departments in Babcock University, Ilishan and Tai-Solarin University of
Education, Ijebu Ode. Data were sourced through the use of a well-structured
questionnaire and the data collected were analyzed using descriptive statistics
approach. Findings from the study revealed that global economic recession has
significant impact on human capital development of lecturers in terms of
inability to receive sponsorship for local and international conferences,
inability to attend seminars, workshops, symposiums and other training and
development programs. Based on this, the study suggested that government and
major stakeholders in tertiary education should adequately fund tertiary
institutions. Tertiary Education Trust Fund (TETFUND) should be disbursed
promptly to deserving institutions. There should be easy accessibility to fund
by academic staff in need of it without ‘politics or bureaucracy’.
CHAPTER ONE
INTRODUCTION
1.1
INTRODUCTION
The issue of global economic meltdown
has generated much controversy in modern
literature. However, it is imperative to review how the issue took most
economic watchers by surprise. The global economies round the world have
experienced the most traumatic moments in many decades. The crisis itself has
been described as perhaps the worst financial crisis since the great depression
of the 1930s (Akingbola, 2009). The world economy has witnessed
stagnation or minimal growth since more than seven decades. At the root of the
recent financial crisis was practically a search for better yield by financial
institutions and investors.
It was also established through research
that the increase of financial markets
and stability in advanced countries brought on by moderate
inflation, high saving ratio, stable exchange rate, growing private sector
employment, etc led investors to begin to search for profitable investment
opportunities (Akingbola, 2009). This resulted to over optimism, speculation,
and leverage. Banks began to massively exceed credit given out to borrowers in
the mortgage market. Individuals began to take advantage of this leverage and
borrowed money from banks to speculate on asset prices and because of the need
to gain market share and competitive position: banks also loosened their credit
standards and did not monitor the credit worthiness of borrowers. Also
commercial banks changed the business models in which they initiated loans to
borrowers and subsequently packaged and sold these loans as securities to
investors in search of higher yields. The financial meltdown inevitably back
leashed on consumer market and on the process of investment in the production
of goods and services.
Nigeria has indeed, experienced the effect of global financial meltdown
and the effect still continue due to the inability to respond appropriately to
global economic impacts. The capital market which is hitherto widely
regarded as the barometer for gauging the economic and financial performance of
the nation’s private and public sector was in disarray and has been finding it
difficult to recover. The total market capitalization was about N15 trillion in
May 2008. A year later it crashed to N4 trillion, a colossal decline of over 73
per cent. The withdrawal of overseas funds from the money market has impacted
negatively on lending to the real sectors of the Nigerian economy. Sustainable
economic growth and development cannot strive under these circumstances.
1.2
BACKGROUND OF THE STUDY
The current global crisis started as a financial crisis but it now has a
global reach. The crisis is unprecedented in the severity of credit contraction
(credit crunch and capital crunch). The roots are in banking rather than in the
securities market or foreign exchange. The Crisis started in the U.S (due to
certain laxities in the US financial system) then spread to Europe then
developing countries and it has now become global. Even countries not affected
by the financial crisis are now affected by second-round effects as the crisis
has now become attached to economic issues. The financial crisis started in the
U.S in August 2007 as a result of a number
of factors that include in the main: (a) the collapse of the
housing market in the United States, (b) the lax financial regulatory
conditions, and (c) the lack of implementation of
strict corporate governance conditions in the United States and most of the
developed economies (Krugman, 2008). Avgouleas, (2008). Wikipedia, 2008
enumerated the causes of the crisis as: breakdown in underwriting standards for
subprime mortgages; flaws in credit rating agencies‟ assessments of subprime Residential Mortgage
Backed Securities (RMBS) and other complex structured credit products
especially Collaterized Debt Obligations (CDOs) and other Asset-Backed
Securities (ABS); risk management weaknesses at some large at US and European
financial institutions; and regulatory policies, including capital and
disclosure requirements that failed to mitigate risk management weaknesses.
This combined to induce a sub-prime mortgage crisis as households faced
difficulties in making higher payments on adjustable mortgages, by the first
quarter of 2008; there was widespread credit contraction, as financial
institutions in the US tightened their credit standard in light of
deteriorating balance sheets (Kindleberger and Aliber, 2005; Laeven and
Valencia, 2008). In the fourth quarter of 2008, increased
delinquency rates affected not only sub-prime loans but
also spilled over into real sectors and other
credits (Avery and Zemsky, 1998, Chari and Kehoe, 2004, Cipriani and
Guarino, 2008).
In Nigeria the policy makers’ response to the likely effects of this
crisis was meek initially; they either did not understand the crises or they
grossly underestimated its magnitude. In general, they thought of the crisis as
a financial issue that could be solved shortly without leading to economic
crisis; however the effects on the oil sector cannot be under estimated. A
decline in the price of oil, which accounts for about 90 percent of the
country’s revenue added to the global credit crunch are among the country’s
predicaments. The crash in the oil market has caused grave concern for
Nigeria’s fiscal policy and the outlook for income earned from exports of crude
oil. The global financial crisis has led to a slowdown of growth across the
world’s economies, resulting in a lower demand for commodities, especially oil.
The transmission of the impact can be traced through several stages of
the Nigerian economy especially through the impact on: (a) earnings
and revenue of governments, (b) the balance of payments
through a narrowing of the current account balance, as well as (c) the widening
of the deficit on the capital account through the reduction of capital flows
because of a re-appraisal of planned investment or the
complete stoppage of previously committed investment
programs, and (d) contraction of the scope of fiscal policy (Ajakaiye and
Fakiyesi 2009). While speculative behavior and investment activities had helped
to buoy up crude oil prices internationally, the reality of the global
recession is beginning to be fully appreciated across the globe. The adverse
impact of the crisis is more direct and more evident on the international price
of oil.
This study tends to look at the performance of the oil sector before the
recession and during the recession, and its effects on economic growth in
Nigeria.
1.3
STATEMENT OF THE PROBLEM
The global economic recession has several far-reaching implications on
the whole global economies. These implications are not just limited to
financial markets alone; the real economies at both national and international
levels together with its various institutions and human capital are having
serious challenges. Academics believe that the major hurdle that is currently
faced is to establish the impact of the global economic recession on human
capital skills development in Nigeria. The challenge is in knowing the key
factors that will enhance human capital growth in Nigeria (Adamu, 2009).
The global economic recession aside, the issue of the growing rate of
unemployment is alarming, and this raises the question of how the global
recession affects human capital development in Nigeria. A number of studies
have been carried out on the global economic meltdown. Few of these, if any,
have really attempted to explore the effect of global economic meltdown on
human capital development in a developing nation. This proposed research
intends to fill that strategic intellectual gap.
1.4
OBJECTIVES OF THE STUDY
The objectives of this research work are:
1. Establish
the level of impact of global economic recession on development of skills of
human capital in Nigeria.
2. Investigate
the effect of global economic recession on training & development and as it
affects human capital development in Nigeria.
3. Examine,
if there is any significant relationship, between global economic recession and
motivation of human capital development in Nigeria.
4. Clearly
identifies what enhances the growth of human capital development in Nigeria.
1.5
RESEARCH QUESTIONS
The objectives of this research work are:
1. What is the impact of the global economic recession
on human capital skills development in Nigeria?
2. How far spread is effect of the global economic
recession on the Nigerian human capital training & development?
3. Is there any significant relationship between the
global economic recession and motivation of human capital development in
Nigeria?
4. What enhances human capital growth in Nigeria?
1.6
RESEARCH HYPOTHESES
The following hypotheses were developed:
Ho1: Global economic
recession has an impact on the development of skills of human capital in
Nigeria.
Ho2: There is a
relationship between global economic recession and training & development
of human capital in Nigeria.
1.7
SIGNIFICANCE OF THE STUDY
This study is important for the following reasons:
1. This study will be of immense benefit to
individuals willing to know more about this current economic recession; its
causes, implications and the way out.
2. It will be also beneficial to business owners, as
it will better equip them with thorough knowledge relevant to them.
3. Also business researchers, academics, and the
government will find it very useful in carrying out their research work and in
implementing and formulating fiscal policies to help steer the nation out of
the recession.
4. It will also be useful as a basis for further
study.
1.8
SCOPE OF THE STUDY
This study seeks to establish how economic recession affects human
capital development in Nigeria. The study shall cover the Nigerian economy with
secondary data drawn from libraries and statistical data. A cross section of
the Nigerian populace, made up of academicians will be used for primary data
gathering.
1.9
DEFINITION OF TERMS
ECONOMY: An economy is a system of organizations and institutions that
either facilitate or play a role in the production and distribution of goods
and services in a society. Economies determine how resources are distributed
among members of a society; they determine the value of goods or services; and
they even determine what sorts of things can be traded or bartered for those
services and goods.
RECESSION: A recession is a general downturn in any economy. A recession
is associated with high unemployment, slowing gross domestic product, and high
inflation.
ECONOMIC RECESSION: Economic recession is a period of general economic
decline and is typically accompanied by a drop in the stock market, an increase
in unemployment, and a decline in the housing market. Generally, a recession is
less severe than a depression. The blame for a recession generally falls on the
federal leadership, often either the president himself, the head of the Federal
Reserve, or the entire administration.
HUMAN CAPITAL: Economist Theodore Schultz invented the term “human
capital” in the 1960s to reflect the value of human capacities. human
capital is a collection of resources—all the knowledge, talents, skills,
abilities, experience, intelligence, training, judgment, and wisdom possessed
individually and collectively by individuals in a population. These resources
are the total capacity of the people that represents a form of wealth which can
be directed to accomplish the goals of the nation or state or a portion
thereof.
DEVELOPMENT: a specified state of growth or advancement; a new and
advanced product or idea; an event constituting a new stage in a changing
situation
HUMAN CAPITAL DEVELOPMENT: Human Capital is asserted to be the most
important element of success in business today. Developing human capital
requires creating and cultivating environments in which human beings can
rapidly learn and apply new ideas, competencies, skills, behaviors and
attitudes.