The Economic Implications of Monetization Policy in Nigeria.

Abstract

Monetization policy which is also referred to as monetization of fringe benefits' is a new approach to the remuneration of public officers in Nigeria. Acts 2002 which provided the reference point for monetization of the salaries and allowances of all categories of Federal Public Servants stipulated that the fringe benefits which were formally paid in kinds be converted to cash by the salary and wage commission. The policy makers believed that the scheme will encourage private initiatives and facilitate creativity and motivation and most importantly, improve the service of quality delivery, promote patriotism and efficiency among civil servants. This paper investigated the economic implications of the Monetization policy using Nigeria data. The ordinary least square multiple regression analytical method was used for the data analysis. Some statistical tools were employed to explore the relationship between these variables. The analysis started with the test of stationarity and co-integration of Nigeria's time series data. The empirical study found that the data were stationary and co integrated. The multiple regression results showed a significant but negative relationship between monetization and gross domestic product in Nigeria. These results were robust to a number of econometric specifications. Our findings and conclusion support the need for the government to be more disciplined in handling good polices. The Nigerian experience shows that although the positive benefits of monetization policy are disputable, positive results will be achieved if the conditions needed for monetization policy to work properly are set in place.