Table 5.6. presents the summary statistics of the measurement variables, namely mean, standard deviation, minimum and maximum values.
5.3.1.1. Characteristics of Growth Indicators
From table 5.6, it can be observed that Nigeria’s real GDP per capita averaged US$624 between 1970 and 2014. It was lowest in 1993 at US$65.5 and highest in 2014 at US$2,945. Thus, Nigeria has experienced substantial growth in its GDP per capita. Nigeria’s GDP grew by an average of 6.3% in the 10 years between 2005 and 2015 (Ministry of Budget and National Planning, 2017). Between the same period, Nigeria’s population grew by an average of 2.63%, implying that per capita GDP grew at a faster rate than population growth. However, as reviewed in chapter 3, Nigeria entered recession in 2016 owing to the decline in oil prices and foreign exchange earnings.Mean non-oil GDP per capita was US$742.85 between 1970 to 2014, reaching a peak of US$1,741 as far back as 1980. This can be attributed to the relatively high contribution of non-oil sectors especially Agriculture to economic growth in earlier periods.
Table 5.6. Summary Statistics of Measurement Variables
Variable Obs. Mean Std. Dev Min. Max.
Real FDI 45 1,808,353,613.18 2,317,026,606.64 -665,187,947.83 7,948,445,265.09 FDI/GDP 45 2.97 2.63 -1.15 12.65 Real GDP PCAP 45 624.44 717.16 65.57 2,945.20 RNO GDP PCAP 44 742.85 520.54 62.55 1741.84 M2/GDP 45 20.62 6.42 9.36 37.96 Private Credit/GDP 45 12.54 6.22 3.31 36.89 Loan/Deposit 45 68.99 11.01 39.04 86.52 MCAP/GDP 45 11.91 10.86 1.15 51.00 Trading Vol/GDP 44 9.14 15.74 0.05 69.11 Market Turnover 45 5.65 3.45 1.02 17.56 Trade Openness 45 48.27 16.13 19.62 81.81 Population Growth 45 2.58 0.15 2.30 3.00 Govt. Cons./GDP 45 10.31 3.65 4.83 17.94
Electric Cons. PCAP 44 88.48 33.16 28.49 155.85
Enrolment PCAP 45 3.61 1.80 0.66 6.81
Inflation 45 18.87 16.35 3.46 72.84
Source: Stata Output for Summary Statistics
5.3.1.2. Characteristics of FDI and FDI Determinants in Nigeria
Real FDI flows averaged US$1.8 billion between 1970 to 2014, reaching a maximum of US$7.9 billion in 2011 during the windfall gains from rising oil prices. Nominal FDI was US$8.9 billion in 2011 but fell sharply to US$3 billion in 2015 and then increased
to US$4.45 billion in 2016, as a result of the prospects for economic recovery. As noted in chapter 3, FDI as a proportion of GDP averaged 2.97% in the entire period, reaching a peak of 12.56% in 1994 (see table 5.6).
On the determinants of FDI, trade openness (which is the ratio of imports and exports to GDP) averaged 48% between 1970 and 2014, from a low of 19.62% in 1970 to a peak of nearly 82% in 2001. The relatively high value of trade in the late 1990s and early 2000s can be attributed to the promulgation of the Nigerian Investment Promotion Commission (NIPC) Act which liberalised foreign investment and opened up all the sectors to foreign participation and 100% foreign ownership (except the oil sector). Population growth has been steadily increasing at an average of 2.58%, from a country of 56 million people in 1970 to 177 million in 2014, and 184 million people as of 2016, making Nigeria the largest consumer market and one of the largest international markets for FDI in Africa. The ratio of Government consumption to GDP, which is often used a measure of government size, averaged 10.31% in the period under review, with a low of 4.8% in 1991 and a high of 17.9% in 1994. Electric consumption per capita, a measure of infrastructural development, ranged between 28.49 Kwh per capita to 155.85 Kwh per capita between 1970 and 2014. Enrolment per capita (the ratio of secondary and tertiary school enrolment as a percentage of population), a measure of human capital development, also increased steadily during the period, ranging between 0.66% and 6.8%. In terms of macroeconomic stability, inflation averaged 18.87% between 1970 and 2014, from a low of 3.46% in 1972 to a high of 72% in 1995. This relatively high level of economic instability may have partly accounted for the volatility in FDI flows to Nigeria over the period.
5.3.1.3. Characteristics of Financial Development Indicators
The ratio of liquid liabilities (M2)/GDP, which measures financial depth ranged between 9.36% to 37.96% between 1970 and 2014, averaging 20.62% over this period. The highest value of M2/GDP was recorded in 2009, after the consolidation period, driving inflationary pressures and this prompted the Central Bank of Nigeria to maintain a tight monetary policy stance between 2010 and 2014 as discussed in chapter 3. Private sector credit to GDP, another financial deepening indicator, ranged between 3.31% to 36.89% in the period under review, averaging 12.54%. This shows a considerable growth in the role of Nigerian financial intermediaries in
banking sector indicator, loan-to-deposit ratio, which measures credit allocation and misallocation, ranged from 39% to 86.5% in the period under review, and averaged 69%. This shows that commercial bank loans are a very sizeable proportion of public deposits placed in these institutions and represents a relatively high level of financial intermediation in the economy.
With respect to market-based indicators, market capitalisation to GDP, which is a measure of stock market size, ranged from 1.15% in 1970 to 51% in 2007, before plunging downwards to 11.16% in 2014, owing to the effect of the financial crisis. The height of 51% recorded in 2007 was due to the recapitalisation exercise of the banking sector when many banks flooded the capital market with public share offerings. As noted in chapter 3, the Nigerian capital market experienced a loss of over 70% of its value due to the financial crisis. Trading volume as a percentage of GDP, which is a measure of market liquidity, averaged 9.14% in the entire period, rising from a low of 0.05% in 1977 to 69.11% in 2008. Another measure of market liquidity, market turnover (the value of equities traded/market capitalisation), ranged from 1.02% in to 17.56% over the same period.