THE EFFECTS OF GLOBAL FINANCIAL CRISIS ON THE ATTAINMENT OF MILLENNIUM DEVELOPMENT GOALS

THE EFFECTS OF GLOBAL FINANCIAL CRISIS ON THE ATTAINMENT OF MILLENNIUM DEVELOPMENT GOALS

A CASE STUDY OF KOGI STATE

CHAPTER ONE

1.0 INTRODUCTION

The need to plan for growth and development of any nation cannot be overstressed or denied, particularly economic development of any Nation plays significant roles in the growth and development of such country.

Therefore, the study of Global financial crisis has become imperative, since this research work tends to have an overview of how the process of globalization and financial development has proved to support economic growth and development with poverty reduction.

This will bring us to look at some terms with financial crisis which occurs when there is a disorderly contraction in money supply and wealth in an economy. It can also be seen as a situation when participants in an economy loose confidence in having loan rapid by debtors. Also economic development which refers to an increase in the per capital national income of goods and services of a country, accompanied in the social, political and economic live of the people inhabiting in that country. Millennium Development Goals which also means the development agenda which are set by time bound and measurable target for combating problems including poverty reduction, ensuring environmental sustainability and discrimination against women target of vision 2020.

Global Financial Crisis first erupted with United State sub prime mortgage collapse in August 2007 which had entered a new phase in September 2008. It started when there was a loss of confidence by investors in the values of securitized mortgage that resulted in a liquidity crisis that prompted a substantial injection of capital into financial market by the United State, Bank of England and European Bank.

Thus the crisis spread with perceived credit risk in the general economy and remained volatile.

Moreso, the Global Financial Crisis in Nigeria had affected different factors of the economy as well as the performance of the various level of government which have manifested inform of declining cash inflow to both the Federal Government, the State and the Local Government which had led to plan failure and increase demand on public infrastructure and social services.

However, this research work is aimed at understanding the recent global financial crisis and to identify the effects and challenges towards the attainment of Millennium Development Goals (MDGS).

1.1     BACKGROUND OF THE STUDY

The effects of global financial crisis on the attainment of Millennium Development Goals.

A case study of Kogi State. This research work is aimed at discovering the way through which the global financial crisis affects the attainment of Millennium Development Goals in Nigeria with reference particularly to Kogi State.

Global finance crisis started in July 2007 when a loss of confidence by investors in the value of securitized mortgage in the United State resulted in a liquidity crisis that prompted a substantial injection of capital into financial market by the United State, Bank of England and the European Banks.

The crisis spread with perceived credit risk in the general economy and remained volatile, even higher in September 2008. The financial crisis deepened owns depend as stock market worldwide crashed and a considerable number of banks mortgage London and insurance companies failed.

Starting with the failures caused by misapplication of risk control for bad debt. Large crisis and a slow down of economic activities. The crisis rapidly developed and spread into a global economic shock resulting in a number of European Banks failure, declines in various stock indexes and large reduction in the market value of equities and commodities.

  The Millennium Development Goals are now at the heart of the global development agenda for each one or more targets have been set mostly for 2015, using 1990 as a bench mark. Indicators have been identified to measure progress against each target. Each goal with their respective targets and indicators need to be adjusted according to the specific country context.

The goals are outlined as follows:

1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve Maternal Health
6. Combat HIV/AIDS, malaria and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development.

Conclusively, the global financial crises affected the above enumerated Millennium Development Goals in the sense that financial institution further accelerated the liquidity and caused a decrease in international trade and world economic development goals with investors transferring vast capital resources into stronger currencies leading many emergent economics to seek aid from international monetary fund (IMF).

1.2 STATEMENT OF THE RESEARCH

The global financial crisis in Nigeria had affected different facts of the economy as well as the performance of the various level of government. These have manifested inform of declining cash inflow to both the federal government, the state government and the local government which in turn had led to plan failure and budget under-performance and increase demand on public infrastructure and social services.

In private sectors, the global financial crisis has led to massive reduction in consumer purchasing power, due to inflation and a drastic fall in public sector spending which has affected the people’s consumption pattern and demand for companies products.

Also, the global financial crisis and its derivatives of money market is a great hindrance to the already depressed manufacturing capacity utilization with the increasing cost and declining consumers disposable income.

1.3 AIMS AND OBJECTIVES OF THE STUDY

The global financial crisis constitute a great challenge in achieving the Millennium Development Goals. The challenge facing the Nigeria economy in respect of development in international market encompasses both slack demand from advanced economics and declining oil price and the contagious effect on global financial crisis.

It is on this note that this research work will attempt to address the following aims and objectives.

1. To examine the challenges faced by Millennium Development Goals.
2. To critically examine the effects of global financial crisis with the strategic agenda in achieving Millennium Development Goals.
3. To know the impact of global financial crisis in some sectors of the economy as it affects economic growth and development.
4. Finally, to find a lasting solution to the effect of global financial crisis on the attainment of Millennium Development Goals.

1.4 SCOPE OF THE STUDY

The scope of this study covers the importance of Millennium Development Goals and the effects of global financial crisis on the attainment of Millennium goals with reference particularly to Kogi State.

1.5 LIMITATIONS OF THE STUDY

This study is limited by certain factors such as:

1. Time: A mode relatively 16 weeks (three months corresponding to semester was given for the completion of this project).
2. Financial Problem: Finance has been my major problem. For it makes it difficult for me to go to internet regularly demanded of this study and research of which requires a substantial amount of money.
3. Inadequate data (Source): Broadly speaking, there is no research work in the school library that expresses issues relating to the global financial crisis as it affects Millennium Development Goal in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

This research is carried out with the hope that it would give an insight and how it distorts or hinders development of Nigeria especially Kogi State.

Furthermore, the study is embarked on with the hope that it will help to profer solution to the effect of global financial crisis in Nigeria particularly Kogi State.

Lastly, It is hope that the research work will serve as a useful material to students, policy makers, academicians and indeed the general public.

1.7 RESEARCH QUESTIONS

The research work will attempt to address the following questions:-

1. In what ways can the problems of global financial crisis be resolved in order to attain the Millennium Development Goals.?
2. What are the effects of global financial crisis on the attainment of Millennium Development Goals.?
3. How does the global financial system influence finance in the development of the economy?
4. What are the impacts of global financial crisis to the financial institutions and human development.
5. What are the societal reactions about the impact of global financial crisis?
6. How does the impact of global financial crisis felt in Kogi State.?

1.8 DEFINITION OF TERMS

For the sake of this research work the term listed below will be defined for the benefit of clarity to the audience or readers:

1. Financial crisis: It occurs when there is a disorderly contraction in money supply and wealth in an economy. It can also be seen as a situation when participants in an economy loose confidence in having loan rapid by debtors.
2. Millennium Development Goals: This is a development agenda which are sets of time bound and measurable targets for combating problems, including scaling up development, poverty reduction, ensuring environmental sustainability and discrimination against women target of vision 2020.

iii.     Economic Growth: This is usually define as the rate of expansion of the national income or total volume of production of goods and services of a country (TAWIAH. 1989:423).

1. Economic Development: Economic Development refers to an increase or expansion of the national income or total volume of production of goods and services of a country, accompanied by improvement in the social, political, and economic live of the people inhabiting in that country (Ile, 2000:100).
2. Research: In the concise words of Osuala (1993:7) research should be seen as a process of arriving at a dependable solution to problems through the plans and systematic collection, analysis and interpretation of data.

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