Conflicts are inevitable in human societies as long as there is
existence. Their causes and effects are numerous and varies, their
resolutions are more challenging than one could ever imagine. It should
be comprehended that conflict is usually a product of human needs and
fear in society. In other words conflict is propelled by unfulfilled
needs of the people, be it in terms of autonomy, sense of justice,
identity. Special/basic needs, rights of individuals and so on . Most of
these needs are of collective character and are often provoked by
official neglect, persecution, denial of human rights and insensitivity
of some leaders. Conflicts manifest themselves as political, social,
economic, religious, territorial conflicts, or conflicts over resources
or national interests. Even though they develop in a local framework,
they are often connected at regional, national and international levels.
Conflicts are usually complex in structure and history, they impact
public interests and goods, including non-represented interests (e.g.
Therefore, this paper aimed at exposing the rational behind the
conflicts in Niger Delta and, also proffer the way forward in resolving
the conflicts in the region.
II) BRIEF HISTORY OF NIGER DELTA.
Niger Delta covers area of about 70,000 square kilometer and accounts
for 7.5% of total land mass in Nigeria, which extend from Apoi to
Bakassi, from Mashin creek to the Bight of Benin, it covers a coastline
of 560km, about two-third of the entire coastline of Nigeria.
Niger delta comprises of nine out of the 36 states making up the Federal
Republic of Nigeria. These are Abia, Akwa-Ibom, Bayelsa cross-River,
Delta, Edo, Imo, Ondo and Rivers states. The estimated population of the
region is about 20million, consisting of over forty different ethnic
groups, speaking 250 different languages and consist of about 300
communities. The predominant occupation of the people are farming and
Since the advent of oil exploration over four decades ago, the region
has become the bread-winner of the nation, which is main source of
foreign exchange earnings for the nation as a whole. Since 1975 till
date the region’s oil resources accounts for 90% of the nation’s export
earnings. Still, the region remains the sick man of the nation, the
least developed constituency of the country in physical and
III) CAUSES OF CONFLICT IN NIGER DELTA
Historically, conflict in Niger Delta region can be traced down to
federal system of government that is being practiced since independent,
which from the very beginning was at variance with the expectation of
many minorities in the nation. It has been argued that the federal
constitution that was drafted suffered from two fundamental and
destabilizing setbacks. The first was the classification of the country
into unequal regions. The second is the political and demographic
domination of the northern, western and eastern regions, being the
majority ethnic groups and the marginalization of the minority ethnic
The Niger Delta people is the largest group amongst the minority groups
spread over the south- south geopolitical zone.
However, it is generally comprehended that the recurring crisis in the
Niger Delta region is the product of the deep-seated sense of neglect
and marginalization by the government and oil companies in supporting
critical human development, infrastructure, provision of basic social
amenities. That the Niger Delta region which harbours the oil that has
made Nigeria and oil companies rich is grossly under-developed
relatively to the rest of the country. Indeed, it is a paradox of
poverty in the midst of plenty. According to Geseksechaff for Techeiche
zussame-Narbeit, GTZ, that 70% of the people in Niger Delta region live
below poverty line and that rate was far worse than African standard.
Also, that there are high rate of unemployment among the youth with over
2million youth being unemployed, while 40% of the people are illiterate.
Furthermore, according to World Bank report(1995), GNP per capita in
Niger Delta region is below the national average of US$280 despite the
population growth rate. Similarly, health indicators are low and they
lag far behind the country average. As it was observed pollution and
continuous flaring of gas from oil prospecting and production have
created health hazards and render fishing and other farming activities
almost impossible. There are high fatality rate from water-borne
diseases, malnutrition and poor sanitation. The quantity and quality of
housing infrastructure are less than expected in most of the region.
Only about 20% to 24% of the rural communities and less than 60% of
urban communities in the region have access to safe drinking water.
Transportation is often difficult and expensive.
The exploration and exploitation of oil companies in Niger Delta and its
attendant abuse on the environment has been more conspicuous. It has
been argued that the oil producing areas suffer from grave damages as a
result of the activities of the oil companies. Thus, serious damage has
been done to the aquatic and marine life of the communities.
The corporate responsibility and the operating standards of the oil
companies and other businesses in the region are below the international
acceptable standards. A situation where oil companies and other
businesses carried out oil exploration and exploitation for over four
decades without a standard environmental impact assessment. This would
be absolutely unacceptable in advanced nations. Niger Delta region is
the only oil zone in the world where the people is subjected to cope
with oil spillage. It has been argued that the federal, state and local
governments are the catalyst that are providing protection to the oil
companies’ lack of social responsibility.
A practical case of aforementioned is that of the Ogoni community in
Niger Delta of Rivers state whose case is being spearheaded by the
movement for the survival of Ogoni people (MOSOP) and the then late
human right activist Ken Saro-Wiwa. They pointed, like other communities
in the Niger Delta region that their land have been devastated and
degraded, their atmosphere has been polluted, water contaminated, trees
being poisoned and that their flora and fauna have virtually
disappeared, these as a result of the activities of oil companies in the
area. To intensify this ugly issue, there are no infrastructural
amenities in the locality; such as electricity, portable water and
access roads. Thus, on August 26, 1990 the Ogoni people issued a bill of
right which was sent to the federal government of Nigeria, demanding
political freedom that will guarantee political control of Ogoni affairs
by Ogoni people, right to the control and use of Ogoni economic
resources for Ogoni development, adequate and direct representation as a
right in all Nigerian national institutions and the right to protect
Ogoni environment and ecology from further degradations.
However, their demand was turned down, thus, MOSOP was mandated by Ogoni
people on August 26, 1991 to make representation to united nations
commission on human and people rights and European community, alleging
that the Nigerian government has denied them their demand. MOSOP was
also mandated to alert the organizations that federal republic of
Nigeria has refused to pay them oil royalties and mining rents amounting
to an estimated $20billion for petroleum mined from Ogoni land over
three decades ago. On January 4, 1993, they followed this up. This
eventually led to the execution of Ken Saro-Wiwa on the 10th of
The Ogonis are not alone for the pursuit of change of status quo. The
Ogbia communities of Rivers state had complained of lack of amenities in
their area, reflecting unfulfilled promises, the Odi direct action of
1998-1999.Others include ,the Ikot Abasi communities which had earlier
demonstrated publicly in 1987 where 38 houses were destroyed due to
instruments of the state (police intervention), also they had demanded
for compensation of N38million from federal government for oil
exploration and exploitation activities that have devastated the area.
The Itshekiris, Ijaws and Urhobos riots and killing arising from oil
issues. The Kaiama Declaration of 1998, which geared towards the control
of the lives of the Ijaws and Niger Delta in general. The governors of
the region such as, Rivers, Delta, Abia, Imo and Akwa-Ibom had met and
presented a case for increased allocation, to at least 10% for the
development of Niger Delta region but they only got 3% as against what
they demanded on june,1992. However, they are still agitating for
resource control of the Niger Delta region.
IV) NIGER DELTA CONFLICT UNDERMINES NIGERIA’S OIL CAPACITY.
Niger Delta case is a topical issue that must be critically examined.
The conflict in Niger Delta (ND) is due to the level of marginalization
and degradation done to the region. However, it has led to the shut-down
of many oil walls and production facilities
Though the government would hardly admit it, that the continuing
conflicts in ND characterized by inter-ethnic clashes, seizure and
vandalization of oil facilities as well as kidnap of oil workers and all
forms of crime, is mounting a heavy pressure on the nation’s oil output
and its short-term plans for the industry which is the bedrock of the
nation. The classic and observable case is that of Warri conflict in
Niger Delta of Delta State. For the period, the oil companies had
counted their losses due to shut-down and also the government had
counted its losses in forgone revenue. As the conflict cropped-up,
Chevron Texaco was losing 140,000 barrels of crude oil per day (pd) in
production shut-down, Jay Pryor, its managing director, told the
business support ground of the commonwealth Heads of states meeting in
Lagos, last year October. Shell Petroleum Development Company (SPDC) on
its own was losing 300,000 barrels pd, while Elf Petroleum was losing
7,500 barrels pd to production shut-down. This lost in production
shut-down amounted to 13,425,000 barrels per month and 120,825,000 over
the nine months period of conflict. Calculated at the rate of $19 per
barrel upon which the federal government predicted the average price of
crude oil for last year, the nation lost about $2.3billion. Taking into
account the up rise in oil price as a result of the US invasion of Iraq,
Nigeria lost substantially more. Furthermore, it is also argued that in
1993, the operations and activities of SPDC were disturbed by about a
hundred communal conflict, leading to the lost of over 12million barrels
of crude oil worth about N369billion. In the case of Ogoni conflict
issue Shell has been losing 8,000 barrels of crude oil pd since the
Ogoni conflict of January 1993. In all, the company arrogates that over
60% of spills and leakage affecting its installations is caused by acts
of sabotage by aggrieved communities of Niger Delta. . Beside rendering
the on-shore oil field dormant, the conflict in ND has also endangered
further investment in the region, with the oil companies losing interest
in the high risk operations. Their focus has now moved to the deep
off-shore fields that are safer. Unfortunately for the government, the
financial arrangement for the deep off-shore is less fovourable under
the production sharing contract than the joint venture arrangement,
VI) THE WAY FORWARD:
The resolution of conflict is a distractive activity that deserved
special attention. As a result of increasing devastation of the
environment of Niger Delta region, it is imperative that efforts to
resolving a violent conflict in Niger Delta should be based on the
aspiration and needs of the people. Genuine conflict resolution effort
in Niger Delta can be achieved by popular participation, equitable
distribution of resources, environmental sustainability and free flow of
Popular participation/public cooperation is perhaps the most important
condition for the success of conflict resolution. It is the petrol of
economic development, involves decentralization of planning and a
dynamic force that makes almost all things possible. Furthermore,
popular participation makes the people more willing to bear hardships
and tolerate mistakes.
However, to achieve permanent conflict resolution development there is
need to seek for popular participation of the people (Niger Delta) and
the only way to do that is to make the Niger Delta people part and
parcel of the planning process and should be involved in the formulation
and implementation of the plan that affects them. They should be
consulted about their needs and aspirations. Discussion should be held
with the people to enlighten them with available resources and how their
needs should be met. Thus, there would be a fovourable atmosphere for
effective operation of the oil companies in the region, since the people
now see themselves as part and parcel of the system and will do
everything humanly possible to protect the system. Consequently,
eliminating many of the evil of bureaucracy such as corruption,
alienation, dehumanization etc.
Equitable distribution of resources is among the focal points of
conflict in Niger Delta. However, in order to resolve the conflict in
Niger Delta permanently, the issue of equitable distribution of
resources must b given considerable attention. The government and the
oil companies should plough back their excess revenue and profits (as a
matter of policy that must be complied by the stakeholders involved and
with legal provision to implement) into the human resources development,
infrastructural amenities and establish industries(agro-based/cottage)
which will help in providing gainful employment for grassroot people of
ND. And also, government should come up with a clear-cut employment
policy that encourages adoption of labour-intensive techniques to an
extent, so as to absorb more labour. Furthermore, government should
encourage small scale enterprises by providing micro credit scheme,
technical training and raw materials for craft skill acquisition, since
this can provide gainful employment for the people. Thereby, making them
to be violent free and protect the system.
Notwithstanding the contribution of the oil sector to the Nigerian
economy, for there to be a permanent conflict resolution in Niger Delta,
oil and gas activities in the region must be regulated to make them more
environmentally friendly. Thus, the following policies and strategies
should be adopted and implemented.
• Strict environmental standards for air, land and water pollution be
enforced. The environmental protection agency should be strengthened for
• Market based instruments like pollution taxes and effluent charges
should be utilized. Revenue obtained from pollution taxes should be
plough back into developmental projects or used to compensate
inhabitants of the Niger Delta who have suffered as a result of
• An attempt should be made to mainstream environmental concerns in
national economic policies. This will promote visibility and
sustainability of environmental policies.
Information on how funds are being disbursed, the amount, projects meant
for and those entrusted with the funds. Furthermore, where the projects
are to be sited and date of implementation and completion should be made
known to the people, in order to ensure accountability and transparency.
This process comes after the people have been consulted about their
needs and aspirations. Thus, collation and dissemination of information
as regards to the region, should be given considerable attention in
order to achieve a permanent conflict resolution in the Niger Delta
Equitable distribution of resources and balanced development are
essential for a rapid development of the economy because the progress of
the entire economy depends on the development of all regions in keeping
with their factor endowments. As has been observed the progress of the
entire economy will be reflected in the paste of growth realized by
various regions that made up the country and in turn, rapid development
of resources in the different regions would contribute towards
accelerating the rate of development for the nation as a whole.
Also, as it has been argued, for there to be a meaningful development
action, a comprehension of the institutional conditions in which the
action will take place should be a priority. All the stakeholders should
forget about the past and lay a solid foundation for the future
generation by embracing options (such as negotiation, consultation,
mediation and conciliation) for positive peace which revolve around
addressing the issue of poverty, environmental devastation, political,
economic and social injustice, low level literacy and unemployment
rather than resorting to violence as a means of championing their case..
In addition, Nigerians should, as a collectivity, realize that
disintegration is not a solution to the National Question. In fact, the
agony of July, 1966, where Nigerians were drawn into civil conflict that
threatened to exterminate the entire Nigerians from the surface of the
earth. The war that followed this conflict claimed the lives of over
3million people including innocent women and children. Both crude and
sophisticated weapons of war were used to destroy lives and properties.
Also Lesotho and particularly Somalia (monolingual societies/single
ethnic groups), as well as Rwanda and Burundi testify that breaking up a
multi-ethnic state into mono-ethnic, mini-ethnic states is not a
guarantee of legitimacy, development, equity, and stability. Equity in
resource distribution, balanced development, accountability, effective
government, democratic legitimacy, etc, are linked to the focal problem
of national integration. If these can be addressed collectively, real
national integration can develop in Nigeria, thus, leading to the
resolution of the national question.
Agbese, D.(1993). “The Curse Of Oil”, Newswatch, Vol.17, No.4. January
Businessday (April 1, 2004). “Oil Feature: Niger Delta unrest”.
Chinedu, C.(2004). “What NDDC is doing in Niger Delta is window
dressing”. Daily Sun, Vol.2, No.363, November 4, Pp21.
Dokubo, A.M.(2004). “Niger Delta People In The Nigerian State”. The
Argus, Vol.3, No.61, November 9-11, Pp4.
Iyoha, M.A, P.A. Adamu (2002). “A Theoretical Analysis of the effect of
Environmental problems on Economic Development: The case of Nigeria”. In
okojie, C.E.E and M.A. Iyoha (eds), The Nigerian Economic and Financial
Review, Department of Economics and Statistics, university of Benin,
Benin city, Pp105-123.
Jhingan, M.L.(2000). Economics of Development and Planning. Vrinda
publications (p) LTD, Delhi.
Niger Delta Development Commission (2004): The Niger Delta
Nukawilcox, B.(1992). “Ogoni People’s Fury”, The Guardian, December 17,
Okafor, N.(1992).“Oil Producing Areas’ Fury”, The Guardian, December 7.
Okene, N.K.(2004). The role of Nigeria in Peacekeeping and conflict
resolution in Africa: A case study of the Sudan crisis. RSCAS, Port
Onduku, A.(2001). Environmental Conflicts: The case of the Niger Delta,
Urhobo Historical Society, Delta State.
Onduku, A.(2001). Sustainable Development as a strategy for conflict
prevention: The case of the Niger Delta.
Princewill, T.J.T.(2004). “Amayanabo of Kalabari Speaks On Reviewed
Peace Accord Document”. The Hard Truth, October 21-27, Pp6.
Saro-wiwa, K.(1992). “I am Ashamed that I am a Nigerian”. Citizen ,
vol.2, No.35, August 31-September 6, Pp12-13.
Saro-wiwa, K.(1993). “These we demand”: Newswatch , vol.17, No.4,
January 25, Pp10-11.
The Argus.(November 6-11, 2004). “Ateke’s Men Launch Fresh Attacks”.
Vol.3, No.61, Pp2.
The Hard Truth.(October 21-27,2004). “ Obasanjo Shuns Peace Talks”.
The Nigerian Guardian Newspaper (2001). Online,
htt://www.ngrguardiannews.com, March 29.
The Nigerian Guardian Newspaper(2001), March 15, Pp66-67.
Todaro, M.P.(1977). Economics for Developing World. London: Longman.
Ukpevo, G. etal.(1993). “Exploitation: The agony of Ogoni”: Newswatch,
vol.17, No.4, January 25, Pp9-17.
Wikipedia. (2004). Economy of Nigeria. Internet.
fuel price: Analysis of its effects on Nigerian economy.
Nigeria OPEC six largest crude oil producers, with her
abundant natural resources still import and pay
international prices for a natural resources it have in
abundance due to provocative policies formulation and
implementation by insensitive leaders. Lately, the
reasons put forward are, that deregulated economy
policies will attract investors into ( oil and gas
sector) downstream/upstream sector and engender
competition, that would in turn bring down the prices of
petroleum products. Secondly, that the cost of
subsidizing importation has become unbearable for
government to sustain. That federal government through
NNPC had been spending N400million daily, to subsidize
import. As part of deregulation policy, federal
government stopped the sale of crude oil to NNPC at the
preferential cost of $18 per barrel. NNPC now buys at
the prevailing international price, since its refineries
are down, thus, exports and uses the proceeds to import
refined fuel for local consumption. Thus, the people are
saddle with continuous increase in the cost of locally
consumed fuel. NNPC, major and independent marketers
have become importers of petroleum products, thus,
leaving pricing at the mercy of market forces. Such a
situation that allows the refined petroleum importers to
make abnormal profits at the expense of the country and
its ordinary citizens.
Therefore, it has become imperative examine how this
ugly situation has eaten deep into the economy marrow of
Nigeria and proffer a solution..
П) INCREASE IN FUEL PRICE AND NIGERIA ECONOMY
The effect of fuel price increase to the growth and
development of the Nigerian economy can not be
overemphasized. consequently, it has worsen the economic
crises in Nigerian economy. In this section we discuss
specifically the effect of increase of fuel price to the
country’s Gross Domestic Product (GDP), Government
Revenue. Furthermore, we discuss its effect on
unemployment and inflation.
2.1) INCREASE IN FUEL PRICE AND GROSS DOMESTIC PRODUCT.
Since 1978, the fuel price increase has negatively
contributed to the country’s GDP downward trend. The
tables below summary the effect of petrol price increase
to the country’s GDP.
In 1978, the fuel price increased to 15%, while GDP fell
by 5.8%. In 1982 the the price rose to20kobo, while GDP
fell by 0.2%..In October, 1994 the fuel price fell from
N 15.00 per litre to N 11.00 per litre and stood till
1998, while GDP fell by 0.6% in 1994 and rose to 2.6% in
1995 (see table 1 and 2).
The interesting trend that is revealed in the analysis
above is the negative relationship between fuel price
and GDP since the deregulation policy. Thus, any time
the fuel increases the GDP tend to decrease.
2.2) INCREASE IN FUEL PRICE AND GOVERNMENT REVENUE.
Fuel price increase has a negative significant on
Government revenue. In
1982, the fuel price increased to 20kobo, while total
revenue fell to N 11,764million. In 1986 fuel price rose
to 39.5kobo, while government revenue fell to
N12,382million. However, the fuel price, in 1993 and
1994 fell to N3.50 and N 11.00 per litre respectively,
while government revenue rose to N138,874million and N
201,911million respectively. In 1998, fuel price rose to
N 25.00 pre litre, while government revenue fell to N
Thus, this inverse relationship can be attributed to
labor unrest which has resulted a fall in oil and gas
industry activities. Consequently affecting the revenue
that would have accrued to government coffer.
2.3) INCREASE IN FUEL PRICE AND UNEMPLOYMENT
As it has been observed that labour demand is influenced
by money wage rate, while labour supply is influenced by
expected real wage rate. Thus, wage legislation has
affected labour market negatively.
In 1982, petrol price rose to 20kobo, while unemployment
stood at 4.1%. During the period 1986-1990, fuel price
rose to 60kobo, while unemployment fell to 3.4%.Between
1991 and 1992 rose to 70kobo, while unemployment stood
at 3.8% and 4.0% respectively. However, the inverse
relationship witnessed during the period 1986-1990, can
be attributed to the impact of SAP, positively on the
economy, which eroded in 1991. Thus, increased
unemployment rate. However, the positive relationship
can be attributed to high cost of production which
2.4) INCREASE IN FUEL PRICE AND INFLATION.
According to Kuti, B.R.,as posited by Mba-Afolabi,
J.(1999),the outrageous price increase had made life
unbearable for Nigerians as prices of goods and
transport fares had risen, forcing people to trek long
distances . To
complement this Tell, a weekly media publication posited
that inflation may also be attributable to the hike in
petroleum products and transportation cost.
Going by analysis, in 1978 petrol price increased to
15kobo,while inflation rate rose to 21.7%. However, in
1993 petrol price fell to N 3.25, while
inflation rose to 57.20%. In 1998, fuel price rose to N
rate stood at 10.00%. Furthermore, in 1999, it fell to
N20.00, while inflation rate declined to 6.6%. The
inverse relationship can be attributed to deficit
financing by federal government.
Ш) RECOMMENDATION AND CONCLUSION.
The following recommendations are made in the hope that
they could Proffer a solution to the destabilized
economy, prompted by hike in fuel prices.
i) Since we import, based on world export market such
that we bring into the country refined oil products, the
next thing to do now is to subsidize. Since the federal
government makes more money from excess of budgetary
projection per barrel. The president should prepare
supplementary appropriation bill to get fund approved to
subsidize the local prices of petroleum products.
That’s, government should control the prices of
petroleum products, rather than leaving it to market
forces, by which, it means to the importers the NNPC and
the private internal and external business moguls. Such
a situation will enable the small clique of refined
petroleum importers to make abnormal profits at the
expenses of the country and its ordinary citizens.
However, government should sell to NNPC, price that is
below the price that prevail in world oil market; while
NNPC export (crude oil) base on the world oil market
price and use the excess to subsidize the imported
refined oil products.
ii) The nation refineries’ Turn-Around-Maintenance (TAM)
should be consolidated with transparency and
accountability. If our existing refineries are
functioning at full capacity, they can meet Nigerians’
internal fuel needs and some excess for export and
strategic reserve of products demand. Therefore, their
repairs should be given urgent attention. Thus, price
hike comes after, not before the repair of the
iii) The labour union and private sector should be
carried along before the increase to forestall a major
iv). Also, the resources should be channeled to
productive ventures that would lead to physical
development and touch the life the average Nigerian
From the analysis so far, we are to say that fuel price
hike has worsen the economic situation of Nigeria.
However, if the above recommendations are put in place,
the fuel situation when price increases would improve
the economy and the protest and threats of labor would
be avoided. Consequently, the economy will be disengaged
from stigma and economic quagmire that have had been
inhabiting the Nigerian economy from experiencing real
economic growth/development. .
Anyanwu, J.C. 1997. Nigeria Public Finance, Onitsha:
Joanee Educational Publishing Ltd.
Ekanem, O. T and M.A Iyoha 1999. Microeconomic Theory,
Mareh publishers, Nigeria.
Federal Office of Statistic. 2001. Lagos
Iyoha, M. A. 2003. “An overview of Leading issues in the
structure and Development of Nigerian Economy since
1960”: In Iyoha, M.A. and C.O. Itsede (eds.), Nigeria
Economy: Structure, Growth and Development, Benin City:
Mba-Afolabi, J. 1999. “The oil price of hike blunder”,
Newswatch, January 18, Pp8-16.
Mumum, M. 2004. “On a gunpowder keg”: TELL, No.25, June
Nmodu, D. 2003. “Oil war in Aso Rock”: Insider, No.42,
October 20, Pp19- 21.
Nkoro, E. 2003. Analysis of the impact of Monetary
policy on Economic Development in Nigeria (1980-2000),
University of Benin, Benin City.
Okomo, A. 2003.”The Dawn of dictatorship”: Insider,
No.42, October 20, Pp22-23.
Okumo, A. 2004. “Obansajo’s for Nigerians”: Insider,
No.25, June 21, Pp26-30.
Orubu, C.O. 2003. “The Development and Contribution of
the Petroleum industry to the Nigerian economy”: In
Iyoha, M.A. and C.O. Itsede (eds), Nigeria Economy:
Structure, Growth and Development, Benin City: Mindex
Semenitari, I. 2004. “Mid-Year Economic Review”: TELL,
June 12, Pp41- 42.
of monetary policy and macroeconomic stability in
An issue which has occupied the minds of governments for
decades is the effectiveness of monetary policy in
influencing economic variables. Despite the lack of
consensus among economists on how it actually works and
on the magnitude of its effect on the economy, there is
a remarkable strong agreement that monetary policy has
some measure of effects on the economy (Udegbunam,2003).
Monetary policy refers to the combination of measures
designed to regulate the value, supply and cost of money
in an economy, in consonance with the level of economic
activities. It can be described as the art of
controlling the direction and movement of monetary and
credit facilities in pursuance of stable price and
economy growth in an economy (CBN,1992).
In modern economies the central Bank is the authority
with the mandate of manipulating monetary policy,
through monetary instruments, to achieving desired
macroeconomic objective. The mandate of Central Bank of
Nigeria(CBN) and the specific objective pursued in
meeting this mandate derives essentially from the CBN
Act of 1958, as amended in successive reviews and
consolidated in Act 24 and 25 of 1991 and subsequent
amendment in 1998 and 1999, specifically the bank’s
primary objectives, as contained in the Act have
remained largely unchanged1. Embedded in these broad
objectives is the mandate to conduct monetary and
financial policies with view to promoting economic
growth and development in Nigeria, with evolution of
Nigeria economy and along with instruments of monetary
policy (see Nkoro, 2003).
However, the primary objective of monetary policy that
cuts across the mandates of most central banks is the
maintenance of price stability, which is fundamental to
the attainment of sustainable growth. That is, the focus
1 These objectives include; issue of legal currency
notes and coins, maintain Nigeria’s external reserve to
safeguard the international value of the legal tender
currency, promote monetary stability and a sound and
efficient system, act as banker and financial adviser to
federal government, and act as the lender of last
central banking in an increasing number of economies is
the fight against inflation, the CBN is still saddled
with the attendant risk of policy conflict.
The pursuit of price stability, invariably implies the
indirect pursuit of other objectives such as economic
growth, which can only take place under conditions of
price stability and allocative efficiency of the
financial markets. Since inflation is generally
considered as purely a monetary phenomenon, with
significant cost to the economy, the primary goal of
monetary policy is to ensure that money supply is at a
level that is consistent with the growth target of real
income, such that non-inflationary growth will be
ensured. The pursuit of price stability, therefore,
encompasses all main areas in which the central bank can
contribute towards stabilizing the macroeconomic
environment of the country.
Money is more closely related to aggregate level of
spending, price, production and employment than any
other single economic variable (Kaufman, 1978). An
excess supply of money which will result an excess
demand for goods and service and in turn causes rising
price/ deterioration of the balance of payments
With the achievement of price stability, the
uncertainties of general price level will not materially
affect consumption and investment decision. Rather,
economic agents will take long-term decision without
much reservation about price change in the
macroeconomic. In addition, the conditions in the
financial market and institutions would create a high
degree of confidence, such that the financial
infrastructure of the economy is able to meet the
requirements of market participants. Indeed, an unstable
or crisis-ridded financial sector will render the
transmission mechanism of monetary policy less
effective, making the achievement and maintenance of
strong macroeconomic fundamentals difficult. This is
because it is only in a period of price stability that
investors and consumers can interpret market signal
correctly. Typically, in period of high inflation, the
horizon of the investor is very short and resources are
diverted from long-term investment to those with
immediate returns and inflation hedges2.
2.These include; real estate and currency speculation.
From a historical perspective, it has been observed that
absence of official monetary management has exposed
economies to economic crisis when money was either too
much or too scarce3.
This study examines a descriptive analysis of the
Money supply and inflation, and identify factors that
effectiveness of monetary policy in Nigeria for the
The estimated parameters will be useful to other
researchers in conducting
II) MONEY SUPPLY: DEFINITION AND DETERMINANTS.
The problem of defining money supply is still associated
with a lot of
Controversy. According to Anyanwu(1993), money supply is
amount of money (e.g. currency and demand deposits) in
circulation in a country at any given time. Currency in
circulation is made up of coins and notes, while demand
deposits or checking current account are those
obligations which are not related with any interest
payment and accepted by the public as a means of
exchange drawn without notice by means of cheque.
The stock of money can be measured in any given time in
an economy. There are two concepts employed in measuring
money supply. The first defined as the stock of narrow
money (usually designated by M1) consists of paper
currencies and coins in circulation in the hands of the
non-banking public and the demand deposit (of the
non-banking public) with commercial bank3. This first
concept can be synonymous with that given by Anyanwu
(1993). The second concept is defined, since the M1 is
viewed as narrow in the sense that it does not contain
commodities that are near monies. This concept defined
money stock (designated by m2) as M1 plus time and
savings(fixed) deposit. Thus, Economists use the stock
money to mean narrow money, since savings and time
deposit are not usually a medium of exchange4.
3 The component of narrow money is usually called the
stock of high-powered money.
4 See Iyoha etal (1998).
Money supply in Nigeria can be defined as the total
amount of currencies outside the shore of banks, demand
deposits with the central
bank, less federal, state and local governments’ demand
deposits at commercial banks(see Ajayi and ojo, 1981).
However, for the purpose of this study, money supply
shall be defined as a stock at a particular point in
time, it conveys the idea of a flow over time. Thus,
money supply at any moment is the total amount of money
in the economy.
According to Jhingan (1986), there are two theories of
the determination of the money supply. Which one is
exogenous determinant, while the other is endogenous
determinant. Thus, the determinants of money supply are
both exogenous and endogenous, which can be described
i) Required reserve ratio.
ii) Level of bank reserve
iii) The desire of the people to hold currency relative
In other words, money supply is determined by the
following factors as numerated below:
i) central bank behaviour.
ii) Behaviour of non-bank public .
iii) Behaviour of commercial banks.
These determinants are synonymous with the under listed,
specifically money is influenced by the following
a) Reserve requirement.
b) Demand for currency
c) Demand for excess reserve.
d) Interest rate
e) Bank rate.
III) MONETARY POLICY TARGETS.
Monetary policy (targets) variables are variables for
which the government seeks desirable values and are the
(intermediate) goals of macroeconomic policy.
Macroeconomic policies are the actions of the policy
makers directed at influencing the levels of employment,
price, output, income distribution, the exchange rate
and the balance of payments. These variables, the level
of which government seeks to influence along desirable
lines through appropriate policy choice, are usually
called policy (targets) variables (opcit).
Monetary policy targets are usually affected through the
use of policy instruments. These are principally
exogenous variables whose values are
determined independent of other variables in the system
and which the government can manipulate to achieve
The question of monetary policy target now arises
because of the ultimate objectives of macroeconomic
policy are not directly and immediately affected by
The two most commonly used intermediate targets of
monetary policy are the money supply and the interest
rate. Fundamentally, there exists an inverse
relationship between the two variable such that any
target set for one must be consistent with the other.
IV) MONETARY POLICY INSTRUMENTS
According to Iyoha (2002), the instruments of
discretional monetary policy include the following;
i) Open market operation.
ii) Discount rate.
iii) Reserve requirement
iv) Moral suasion.
v) Direct control of banking system credit, and
vi) Direct regulation of interest rate.
OPEN MARKET OPERATION: Involves the sales or
purchase of government securities to/from commercial
banks and non-bank public with the view to regulate the
cost and availability of credit. The open market sale of
securities by the CB is concretionary while purchase
depends on the existence of a well-developed securities
market, while in responsive to market forces and one
which has a large amount of easily marketable government
DISCOUNT RATE: the rate of which CB lends to its
commercial banks. The interest rate charged by CB is
known as discount or rediscount rate. By varying
discount rate CB can influence the credit availability,
as lender of last resort to commercial banks. Its direct
impact is on credit cost, unlike OMO, that has direct
impact on reserve of commercial banks.
RESERVE REQUIREMENT: set a minimum balance on the
liquidity of commercial banks vis-à-vis their
liabilities. They have two uses: to ensure the solvency
of banking system, and control the expansion of credit
creation as an objective of monetary policy.
MORAL SUASION: a process by which the CB make known
to commercial banks officials through informal (oral or
written) discussion the direction in which they wish
monetary policy to proceed and the contribution, which
is expected of the commercial banks. Unlike the formal
compliance is not legally enforceable.
DIRECT CONTROL OF BANKING SYSTEM : involves the
imposition of quantitative ceilings on the overall
and/or sectoral distribution of credit by CB. This tool
is selective, not general, it is direct. This can be
used as a weapon for economic development.
DIRECT REGULATION OF INTEREST RATE: generally
used in LDCs and not in ACs. In ACs, interest rates are
market determined to a large extent. However, in LDCs
like Nigeria, interest rates are administered. In
particular, interest rates are fixed within which both
the deposit and the lending rates are expected to be
maintained by the commercial banks.
VI) CONDUCT OF MONETARY POLICY TO ACHIEVING
Giving the bank’s mandate to promote macroeconomic
stability through the conduct of monetary policy, it is
pertinent to examine how monetary policy has faired
vis-à-vis the attainment of its stated objectives to
achieve domestic price stability as a necessary
condition for promoting high output and employment
growth and a healthy balance of payments position.
However, maintenance of price stability is often
difficult to attain, at least in the short-run because
of its apparent conflicts with other macroeconomic
objectives, such as output and employment growth.
Consequently, monetary management invariably involves
some trade-offs with other national economic policy
The conduct of monetary policy solely relied on direct
control measures, which involves imposition of selective
sectoral control and credit ceiling, interest rate
control, cash reserve requirement, exchange rate control
and call for special deposits. The use of market-based
instrument was not successful due to the
under-development of the financial market in the early
part of period under review.
The focus of sectoral bank credit allocation was to
energized activities in the real sector of the economy,
while interest rate ceilings imposed were to promote
investment and output growth. Imposition of call for
advance deposits, compulsory deposits on bank on import
and issuance of stabilization securities were introduced
to reduce banks’ ability to expand credits in order to
reduce domestic price pressure, BOPs positions.
The overall economic environment under which monetary
policy was conducted deteriorated in the 1980s as the
oil boom of the 1970s came to an unexpected end. As
shown in table 1, the spot oil price from Bonny light
fell from US$38.82 per barrel in 1980 to US$30.00 per
barrel in 1983,as the recession continued spot oil price
fell further to US$14.16 per barrel in 1986, while
export earnings from oil fell from N13,306.93million to
N10,993.10million in 1986. Thus , government
developmental strategies changed, the direct control
measures aimed at reducing aggregate demand and restore
external equilibrium were tightened up.
Therefore, it is worthy to comprehend that the era of
oil boom left the economy with unacceptable development
that stigmatized the macroeconomic management. Thus,
heavy dependence on the oil sector as the major source
of government revenue and foreign exchange earnings and
government expenditure. Also banks’ compliance with
credit guidelines was less than expected. As can be seen
in table 1,macroeconomic environment was engulfed by
pressure, as the growth of domestic liquidity increased
further, M1 rose from 50.1% in 1980 to 62.2% in 2000.
The expansion was attributed to the rapid increase in
banks credit to the domestic economy(see table 3). As
recession persisted, oil receipts were no longer
adequate to meeting increasing levels of demands and
since expenditures were not rationalized, government
resorted to borrowing from CBN to finance its huge
deficits. Thus, making monetary instability.
Thus, the Structural Adjustment programme (SAP) was
adopted in july,1986 against the collapsed of world oil
market and the ugly nature of the economy. It was
designed to achieve internal and external balances by
altering and restructuring the production and
consumption patterns of the economy, eliminating price
distortions, reducing the heavy dependence on crude oil
exports and consumer goods imports, enhancing the
non-oil export base and achieving sustainable growth(see
The objectives of monetary policy since 1986 have
remained the same as earlier stated.
In accordance with SAP, monetary policy was aimed at
introducing market-oriented financial system for
effective mobilization of financial savings and
efficient resource allocation. The main instrument of
the market-based is the open market operation, OMO. This
is complemented by reserve requirements and discount
window operations. The introduction of OMO in an economy
that had been under direct control for long, needed
substantial improvement in the macroeconomic, legal and
infrastructural environment for effective operation.
In combination with monetary policy, a number of
important and far-reaching financial policies were
formulated and executed during this period. A major
financial policy was financial deregulation, which
involves essentially interest rate and exchange rate
To ensure successive take-off of market-oriented
monetary policy, thus, improve macroeconomic stability.
The following measures were taken:
a) Reduction in the minimum ceiling on credit growth
allowed for banks.
b) The recall of the special deposits requirements
against outstanding external payment arrears to CBN from
c) Abolition of the use of foreign guarantee/currency
deposits as collaterals for naira loans.
d) Withdrawal of public sector deposits from banks to
e) The use of stabilization securities for the purposes
of reducing the size of excess liquidity in banks was
f) Commercial banks’ cash reserve was increased.
g) The minimum paid-up capital was increased to
N20million and N12million for commercial and merchant
banks respectively, in 1992, it was also increased to
N50million and N40million for commercial and merchant
banks respectively; further, it was also increased in
1997, to N500million for both banks; also increased to
N25billion with effect from 2005.
h) A deposit insurance corporation-the Nigeria deposit
insurance corporation(NDIC) was established in 1988 as
an additional regulatory body to help in ensuring
safety, soundness and confidence in the deregulated
banking sector, and
i) Two important decrees were promulgated to enhance the
operation of CBN, they are CBN decree No24 of 1991 and
banks and other financial institutions decree (BODFID)
No25 of 1991 these decrees widened further the powers of
CBN in the area of monetary policy, bank supervision and
examination, and prudential regulation (Udegbunam,
Nevertheless, excess liquidity, money growth and
inflation problems intensified. Thus, had adverse
implications for monetary management. Table 1 reveals
that, except in 1986 and 1990, inflation rate had been
consistently two-digit, between 1986-1999. This was
attributed to persistent government deficits. Liquidity
ratio increasingly exceeded 30% except in 1992, while M1
growth had been higher than the targeted growth over
this period, this also was attributed to rapid increase
in banks’ credit to the economy.
In September 1, 1992, there was a major change in
monetary operating techniques, from the use of direct
control to indirect control operating techniques. The
CBN, lifted credit ceiling imposition on individual
banks that met CBN requirements on selective basis in
respect of minimum capital base, capital adequacy ratio,
cash reserve and liquidity ratio requirement, prudential
guidelines, sectoral credit allocation and sound
management. On June 30, 1993, CBN commenced OMO in
treasury securities with banks through discount houses
on a weekly basis.
With the introduction of indirect monetary control
instrument, CBN now controls the stock of money (from
banks and non-bank public) through manipulating the
monetary base or reserve aggregates. This was expected
to move the interest rates to the desirable position, so
that through their influence on monetary aggregates and
market interest rates, the ultimate goals of monetary
policy may be achieved.
However, the role of discount houses is to serve as
intermediaries between CBN and the banks that met CBN
requirements. As intermediaries they underwrite new
issues of treasure securities and provide discount
facilities to banks in need of funds. They also provide
banks an avenue to invest their idle cash balances (see
OMO involves the sales or purchases of eligible
government securities to/from banks and non-bank public
with a view to regulate the cost and availability of
credit and ultimately real economic activity. Most often
CBN invites the discount houses to offer bills to it, or
offer bill to discount houses for outright purchase or
OMO has remained a major tool of monetary policy in
Nigeria with its effective use in moderating the
system’s liquidity (see table 2).
It is obvious to note that the unexpected collapse of
oil boom in early 1980s, projected the Nigeria economy
into the state of quagmire; thus, SAP was adopted to
redeem the economy from further deterioration. The main
strategies of this programme were - deregulation of
external trade and payments arrangements, the adoption
of a market-determined exchange rate for the naira,
substantial reduction in complex price and
administrative controls and more reliance on market
forces as a major determinant of the economy.
In line with the general philosophy of economic
management under SAP, monetary policy was aimed at
inducing the emergence of market-oriented financial
savings and efficient resource allocation (see Sanusi,
However, the factors that have had stood as obstacles to
market-oriented monetary control operation were:
instability of the financial sector, which was
attributed to bank distress and lack of managerial
efficiency, resulting to financial institution failures;
non-harmonization of fiscal and monetary policies and
increase government expenditure. These were responsible
to large extend, for excess liquidity and inflationary
pressure in the economy. Also, the poor state of
economic infrastructure, resulting from past neglect,
influenced monetary management adversely. Thus, the
economic growth was therefore, sluggish with negative
consequences for poverty alleviation.
Aderibgbe,J.O. 1997. “ Monetary policy and Financial
sector Reform” CBN Bullion, Vol.21, No.4, pp7-13.
Aigbokhan, B.E. 1995. Macroeconomics: Theory, policy and
Evidence, Benin city: Idelojie publishers.
Ajakaiye, O. 2002. “Economic Development in Nigeria: A
Review of Experience” CBN Bullion, Vol.26, No.1,
Anyanwu, J.C. 1993. Monetary Economics: Theory, policy
and Institutions, Onitsha: Joanee Educational Publishing
Byrn, R. T. and G,W. stone. 1992. Economics, U.S.A:
Iyoha, M.A. 1998. Macroeconomics for Developing World,
Benin city: Miyo Educational publisher.
Iyoha, M.A. 2002. Macroeconomics: Theory and policy,
Benin city: Mareh publishers.
Iyoha, M. A, S.A. Oyefusi and D.E. Oriakhi. 1998. An
introduction to modern Economics, Benin city: Mareh
Iyoha, M. A. 2003. “An overview of Leading issues in the
structure and Development of Nigerian Economy since
1960”: In Iyoha, M.A. and C.O. Itsede (eds.), Nigeria
Economy: Structure, Growth and Development, Benin City:
Jhingan, M.L. 1993. Macroeconomic Theory, Delhi: Konark
Money watch. 2001. “Imperative of the need to
Restructure Naira”: Guardian , January 3, Vol.17, No
Monetary policy. 2002. “Nigerian Economy”:
Nkoro, E. 2003. Analysis of the impact of Monetary
policy on Economic Development in Nigeria (1980-2000),
University of Benin, Benin City.
Ojo, M.O. 1993. “Monetary policy Instruments in Nigeria,
their changing nature and implications”: The Nigeria
Sansui, J.O. 2002. Annual lecture of the Development
policy Centre (DPC), Abuja.
Sanusi, J.O. 2002. “The evolution of monetary Management
in Nigeria and its impact on Economic Development”: CBN
Bullion, Vol.26, No.1 pp1-19.
Special Report. 2003. “Economy”: News watch, June 9,
Vol.37 No.22 pp47-49.
Udegbunam,R.I. 2003. “Monetary and Financial policy”: In
Iyoha, M.A. and C.O. Itsede (eds), Nigeria Economy:
Structure, Growth and Development, Benin City: Mindex
Activities of Organized Labour in a Deregulated Economy:
A case study of Nigerian economy. (Article 4).
In most deregulated economies central labour
organization (CLO) exist and do exert a great influence
on the functioning of the labour market, price level and
government decisions through various strategies, such as
collective bargaining and strikes. Strikes come when
collective bargaining has failed. As observed only 2 to
4 percent of all negotiations result to strikes and most
of these last less than two weeks. Although most strikes
centre on disagreements about labour market, price level
and government monetary/fiscal decisions. Others include
union organization and security, work rules, safety, and
job security disputes.
In every economies, almost every trade or profession is
unionized. You can name hundreds of them, therefore,
this unification constitute what is known as central
labour organization ( in Nigeria it is called Nigeria
labour congress, NLC). That is, these unions are
affiliated to central labour organization (CLO) as
However, this paper is aimed at exposing how activities
of organized labour, which geared towards improving the
welfare of the union have affected the economic
situation of the nation.
II) AN OVERVIEW OF ORGANIZED LABOUR HISTORY IN
The history of organized labour union in the country has
been characterized by continuous oscillatory unity and
division in 1938 to 1978 when present Nigeria labour
congress was decreed into law. This was as a result of
pressure from workers themselves and global tendency.
Though before the decree, there was a trade union
tribunal in 1976 and thereafter, trade union Act in
1977. this Act gave right to the establishment of
organized labour union in Nigeria in 1978.
The trade union Act of the federal government of Nigeria
i) Upon the commencement of the Act, NLC shall be the
only central organization with power as specified in
ii) It shall be an offence for any trade union not
specified in part A of the schedule to affiliate with
central labour organization. This implies that it is
unlawful to have another CLO other than the NLC and
Senior Staff Association can not organize under a CLO
(excludes senior staff workers from having own CLO).
III) STRIKE AND COLLECTIVE BARGAINING AS LABOUR UNION
Strike and collective bargaining are strategies employed
by labour union to raise wages, improve worker’s working
condition and influence government decisions that are
hostile to the union. In a system where strike is
outlawed, union through collective bargaining seeks
higher wages and better working condition for their
workers. However, the power that control a union may
have other goals such as job security for union
officials. Thus, limiting bargaining. Hence, all we can
say at this juncture is that bargaining tends to be in
favour of the party (union or employer) with the
greatest power or bargaining savvy. However, strike and
collective bargaining may co-exist. When collective
bargaining failed, labour will now employ their ultimate
weapon of the union, which is strike.
The onset of strike is a signal that union workers
demand much than employer is willing or decision of the
employer is hostile to the welfare of the
employees/labour. As time elapses, labour becomes
willing to settle for less as their financial position
fall, while employer is also willing to raise its offer
or withdraw it decision, as stakeholders and the general
public apply pressure to settle. Declining demand and
rising offer/withdrawal of decision intersect to signal
the end of strike.
Therefore, strike, the big stick of the union is an
action of unionized employees/labour whereby they
simultaneously discontinue working and prevent other
potential workers from offering their services to the
employers. The purpose of strike is to impose economic
costs on the employer, coercing him to accept the
proposed terms of the union (Ekanem and Iyoha, 1999).
IV) ECONOMIC EFFECTS OF LABOUR UNION ACTIVITY IN
Despite what have been discussed in the foregoing
sections as regards to the impact of organized labour
union activities on wage employment behaviour,
conditions of service for its members and some
government decisions for the betterment of the masses,
through strikes and collective bargaining. However,
labour activities also pose threats to macroeconomic
stability in most of the free market economic, the
problem of collective bargaining and the attendant
strike actions it engenders have continued to pose
disturbing questions in the minds of public relations
experts, public administrators and the public in
general. One of the most important questions is in
respect of the usefulness of the strike in bringing
about mutually acceptable and beneficial settlements to
trade disputes .As the actions continue the public
becomes more and more irritated and frustrated by the
inconveniences and hardships these strikes cause
…(Ekanem and Iyoha,1999). Gary Becker
(1988),union…receive more credit and at the same time
more blame than they deserve. Some opponents of union
posited that curing inflation requires controlling those
activities of union. Inflation is blamed on union on the
ground that they artificially boost wages through
collective bargaining or strikes. As can be
observed/seen from the table below: before the minimum
wage legislation was passed in year 2000, inflation rate
fell from 10.0% in 1998 to 6.6% in 1999, but after the
legislation was passed in 2000, at the end of the fiscal
year, 2000, inflation rate now stood at 6.9%. while it
rose from 11.0% in 2003 to 18.0% at the mid-year of
2004, as a result of general strike witnessed within
this period (see table below). The effect of that of
2000 can be as follows: as income/wage increases,
employees now found out that they have more money, thus,
their demand increased, therefore leading to a higher
price. Since this increase in wage wasn’t caused by
increase in productivity. Also, during strike there is
always reduction in supplies of goods and services to
consumers, thus, causing the consumers to bear the costs
as higher prices and lower consumption and federal
government/firm incurs higher costs in carrying out its
functions, thus, huge losses are incurred (by consumers,
thus, higher price is charged), that’s millions of
dollars are lost each day of the strike. However, as it
has been argued for wage cost-push theory, the
conditions for its application seems present in Nigeria.
There has been growing unemployment and, thereby,
stronger union. The effect of minimum wage legislation
on the labour market cannot be overemphasis, before the
legislation unemployment was 3.2% in 1999, but after the
enactment it rose to 3.4% in that same 2000.
However, there are social ills experienced during the
period of strike in the nation, such as armed robbery,
stealing, smoking of hard drugs etc. Mostly, students
are people who indulged in these social ills, because
whenever there is strike they are sent home, thus, they
begin to engage themselves in one social ill or the
other in order to keep soul and body busy. Consequently,
jeopardizing the whole system. Further, many lives had
being lost as a result of nurses and doctors being on
strike. A clear example is the case of late Bola Ige who
medical attention was not giving in university of Ibadan
teaching Hospital as a result of strike and before they
could have taken him to another Hospital he had already
given up. This is what strike can cause the nation.
V) EFFORT MADE BY GOVERNMENT IN CURBING UNION
Government understanding the implication of the
activities of labour has been making effort in curbing
the activities of labour, in order to minimize its
effect on socio-economic stability since the
pre-colonial era. Ekekwe (1986) posited that government
sought to control unionism through training in Britain,
or locally through designated labour advisers, of union
leaders…,while this was going on, government maintained
a policy of being tough on the labour movement, as can
been seen from the 1949 shooting of striking coal
workers in Enugu. He still went on to say that
government would also not recognize unions if it
considered their leadership to be radical. Recently, to
lessen the influence of labour, the federal government
came on board with a proposed amendment to the labour
bill. Though this wasn’t first of such. The bill is
seeking to amend two existing Acts viz:
i) The trade union international affiliation Act of
ii) Trade union Act 1990 as amended.
The objective of the proposed amendments is to align
these Nigeria laws with democratic ethos and principles
of a free society. In pursuing this objective it appears
that there are undertone objectives of:
i) Weakening the only CLO which has successfully
challenged some government decisions.
ii) De-registering NLC and
iii) Outlaw strikes in Nigeria.
All these are the symbols of destabilization of CLO that
influences most of its decisions, but the bottom line
is, how far can government go?
However, union generally strives to accomplish some
acceptable balance of increased income and improved
conditions of service for their members. It does
influence significantly the wage-employment decisions of
the organization in which they operate. Whenever union
succeed in achieving higher wage for its members, it is
always at the expense of macroeconomic stability.
Generally union seeks to attain some acceptable balance
of increased wage-employment, improved conditions of
services of its workers and curbing government hostile
decisions. It does this through collective bargaining
and strike or threat to strike. But whenever union
embark on these activities, it is always at the expense
of socio-economic stability of the nation. Thus, public
frustration grows, more voices are being raised in
favour of some compulsory settlement of labour-employer
disputes. Freedom to strike comes at a price. But when
the price is compared with the costs of compulsory
settlement, it does not look nearly so high… (Ekanem and
Iyoha, 1999). It is apparent that the influence and
power of the Nigeria Trade unions for good or ill should
not be underestimated…(Ekekwe, 1986),since their
activities are capable of holding the economy
(socio-economic stability) to ransom.
Also the debate surrounding the impact of union wage
increase on inflation will probably continue for as long
as union exist.
Therefore, this paper submits that labour and employer
(government/ private sector ) should consider the masses
in whatever decision they are to take since the
repercussion of their actions will befall on the masses,
by means of higher prices on goods and services, low
consumption and loss of lives. Also, all kinds of social
ills are experienced during the period of strike.
Byrns, R.T and G.W. Stone. 1992. Economics, U.S,A:
Harper Collins Publishers
Ekanem, O.T and M.A. Iyoha. 1999. Microeconomic Theory,
Benin city: Mareh Publisher.
Ekekwe, E. 1986. Class and State in Nigeria, Lagos:
Longman Nigeria Limited, Pp64-65.
Mba-Afolabi, J. 1999. “The oil price of hike blunder”,
Newswatch, January 18, Pp8-16.
Mumum, M. 2004. “On a gunpowder keg”: TELL, No.25, June
Vanguard conference hall, 2004. “Labour Bill: An ominous
legislation”, Vanguard. No.5579, Vol. 20, August 16,
Nkoro, E. 2004. Increase in fuel price: Analysis of its
effect on Nigerian Economy