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PROJECT TOPIC: THE IMPACT OF CONTINUE DEVALUATION OF NIGERIA CURRENCY ON INDUSTRIAL PERFORMANCE IN NIGERIA (A CASE STUDY OF NIGERIA EAGLE FLOUR MILL, NIGERIA LIMITED IBADAN)

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CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

The issue of Nigeria exchange role of currency vis-a-vis other international trade currencies especially the American Dollar and British Pound steeling has become other of the day, many Nigeria that is carrying out business especially those that procure material from abroad. In July '1996 the Federal Government of Nigeria introduced structural adjustment programmer (SAP) to correct defect between balance of payment in both national and international trade.

Likewise, on September 1986, THE Second tier foreign exchange market was introduced the rational for setting up the (SF EM) is based on the need of naira via the interplay of market force in July1987, Foreign Exchange Market (FEM) took over from SFEM and later it was changed to Authomous Foreign Exchange Market (AFEM)

The Inter-Bank Foreign Exchange Market (IFEM) was officially introduced 25 of October 1999, to replace AFEM (Autonomous Foreign Exchange Market). On July 22, 2001 the Central Bank of Nigeria re-introduced the Auction method of exchange rate this is because the past the method used has been a failure because the realistic exchange rate of naira is yet to be achieved. However, since the introduction of new exchange rate in 2006, the value of naira or currency to tile United State Dollar has edged downward, further, there has been a widening gap between the parallel markets with the rate in the former is always on the increase. As a result of fundamental increase in exchange rate of Nigeria Currency and those of other countries day-in-day out has resulted in Naira Devaluation

1.2    STATEMENT OF THE PROBLEM

Let look at the three basic function of a currency and ask if the Nigeria Currency: the Naira still satisfactorily fulfils those functions. The currency of a nation would normally serve as a medium of exchange, a standard of value and a store of value. A close perusal of these functions would show that in a complex economy, money is usually the only accepted medium through which a buyer pays a seller. The currency of a nation function also as a store value. Money is a convenient way to store wealth for use whenever it is needed. If however, the value of a currency is not stable, the value of that wealth will diminish daily. The Nigeria currency has lost the ability to store value over a long period of time and as years go by. This does have severe consequence for the economy.

As of 2001, the most conspicuous fact about Nigeria economy is that the corruption and mismanagement of its post colonial governments has prevented the channeling of the country’s abundant natural and human resources especially its wealth in crude oil into lasting improvement in infrastructure and the construction of a sound base for self-sustaining economic development. Nigeria is poorer today than it was at independence in 1960. Under colonial rule; Nigeria remained an agricultural country, exporting raw materials to Britain and importing from it finished goods. While the industrialization of the  country was discouraged, rudimentary foundation for a modern Nigeria economy however, were laid. It has been that the currency development is one of the economics which in turn affect the activities of company (Okin Biscuit Nigeria limited). In the cause of identifying the evaluation of the impact of continues Devaluation of Nigeria currency on industrial performance in Nigeria.


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