SCHEME OF WORK
WEEK TOPIC
1. Revision
2. Mining.
3. Financial institutions.
4. Money.
5. Money (Cont’d)
6. Channels of Distribution
7. Channels of Distribution ( Cont’d)
8. Channels of Distribution (Cont’d)
9. Instrument of Business Finance
10. Instrument of Business Finance (Cont’d)
11. Revision.
3RD TERM
WEEK 1
MINING
Content
1. Components of the Nigerian mining industry
2. Minerals-types, uses and locations
Sub-Topic 1: Components of the Nigerian mining industry
Mineral resources are substances that are formed naturally in the earth. They can be referred to as free gift of nature because they are not brought into existence or produced by any human intervention.
Mining is the process by which minerals are extracted or removed from the earth. Nigeria is richly endowed with 34 different minerals which include coal, gold, columbite, lead barites, cassiterite, gemstone, talc, feldspar, bitumen, iron ore and so on. At the moment, Nigeria economy depends heavily on crude oil and natural gas. However, seven otherminerals deposits have been prioritized by the Ministry of Solid Mineral Development for reforms in the mining sector. These include coal, bitumen, limestone, iron ore, barites, gold and lead or zinc.
Mineral resources can be classified into solid and non-solid minerals based on forms. Solid minerals are hard and firm with a definite shape e.g. coal, gold, bauxite, bitumen, iron, ore, while the non-solid minerals are without form or shape e.g., gases and crude oil.
Although organized mining of solid mineral started in Nigeria as far back as 1903, the industry only accounts for about1% of the nations’ GDP until the discovery of vast deposit of oil resources in 1956. This however, shifted attention away from solid mineral to oil resources. The civil war of 1960s also affected the industry as many mining expatriates had to leave the country. These had altogether led to the dead state of the industry until recently (starting with the creation of the Ministry of Solid Minerals Development).
Meanwhile, the oil and gas mining industry remain vibrant and accounts for about one-fifth of Nigeria.
Importance of Mineral resources in Nigeria
(1) Sources of government revenue
(2) Employment generation
(3) Infrastructural development
(4) Sources of foreign exchange
(5) Improvement in terms of trade
(6) Sources of energy
(7) Establishment of related companies
(8) Improvement in standard of living
Evaluation:
(1) Mention two classes of mineral resources
(2) List five importanceof mineral resources in Nigeria
Sub-Topic 2: Location and Use of Some Mineral Resources found in Nigeria
Mineral resources Location(where they are found Uses
Coal Enugu,Ogbete Power generation
Gold Maru, Ankpa, Malele, Tsohon,
Birnin, Gwari-Kwaga, Bin Yauri,
Okolom-Dogondaji and Ipinrindo
InOsun state.
Jewelries and
Ornamental
Manufacturing
Bitumen Lagos, Ogun, Ondo and Edo State Road construction
Iron Ore Itakpe in Kogi State Steel and
Aluminum
Manufacturing
Columbite and
Tantalite Nassarawa State Electronics
Manufacturing
EVALUATION:
(1) Iron ore can be found in ------------------
WEEKEND ASSIGNMENT
Objective Test:
1. Mineral resources can be classified into ------- (a) solid and solid (b) solid and gold (c) solid and non-solid (d) oil and gases
2. --------------are substances that are formed naturally in the earth (a) Bitumen (b) Oil (c) mineral resources (d) Gold
3. ---------- is the process by which minerals are extracted or removed from the earth. (a) Mineral resources (b) Coal (c)Bitumen (d) Mining
4. -------------- is the main source of the country’s foreign exchange (a) oil account (b) foreign account (c) Mining account (d) Gold account
5. The following are the importance of mining industry except. (a)sources of government revenue (b) employment generation (c) sources of energy (d) Establishment of militant
Essay Questions:
1. Draw a map of Nigeria and locate where the following minerals can be found. Gold, Bitumen, Iron Ore, Coal, Columbine.
2. What is the importance of mineral resources in Nigeria?
3. Distinguish between mineral resources and mining.
4. Define Mining.
5. Differentiate between solid and non-solid minerals.
PRE-READING ASSIGNMENT: Read about money and capital market.
WEEKEND ACTIVITIES:
Draw a map of Nigeria and locate where the following minerals can be found. Gold, Bitumen, Iron Ore, Coal, Columbine
REFERENCE TEXTS:
MelsroseEconomics for senior secondary school Book 1 by M.A. Shittu et al; Melrose Books and publishing Limited.
Content
1. Components of the Nigerian mining industry
2. Minerals-types, uses and locations
Sub-Topic 1: Components of the Nigerian mining industry
Mineral resources are substances that are formed naturally in the earth. They can be referred to as free gift of nature because they are not brought into existence or produced by any human intervention.
Mining is the process by which minerals are extracted or removed from the earth. Nigeria is richly endowed with 34 different minerals which include coal, gold, columbite, lead barites, cassiterite, gemstone, talc, feldspar, bitumen, iron ore and so on. At the moment, Nigeria economy depends heavily on crude oil and natural gas. However, seven otherminerals deposits have been prioritized by the Ministry of Solid Mineral Development for reforms in the mining sector. These include coal, bitumen, limestone, iron ore, barites, gold and lead or zinc.
Mineral resources can be classified into solid and non-solid minerals based on forms. Solid minerals are hard and firm with a definite shape e.g. coal, gold, bauxite, bitumen, iron, ore, while the non-solid minerals are without form or shape e.g., gases and crude oil.
Although organized mining of solid mineral started in Nigeria as far back as 1903, the industry only accounts for about1% of the nations’ GDP until the discovery of vast deposit of oil resources in 1956. This however, shifted attention away from solid mineral to oil resources. The civil war of 1960s also affected the industry as many mining expatriates had to leave the country. These had altogether led to the dead state of the industry until recently (starting with the creation of the Ministry of Solid Minerals Development).
Meanwhile, the oil and gas mining industry remain vibrant and accounts for about one-fifth of Nigeria.
Importance of Mineral resources in Nigeria
(1) Sources of government revenue
(2) Employment generation
(3) Infrastructural development
(4) Sources of foreign exchange
(5) Improvement in terms of trade
(6) Sources of energy
(7) Establishment of related companies
(8) Improvement in standard of living
Evaluation:
(1) Mention two classes of mineral resources
(2) List five importanceof mineral resources in Nigeria
Sub-Topic 2: Location and Use of Some Mineral Resources found in Nigeria
Mineral resources Location(where they are found Uses
Coal Enugu,Ogbete Power generation
Gold Maru, Ankpa, Malele, Tsohon,
Birnin, Gwari-Kwaga, Bin Yauri,
Okolom-Dogondaji and Ipinrindo
InOsun state.
Jewelries and
Ornamental
Manufacturing
Bitumen Lagos, Ogun, Ondo and Edo State Road construction
Iron Ore Itakpe in Kogi State Steel and
Aluminum
Manufacturing
Columbite and
Tantalite Nassarawa State Electronics
Manufacturing
EVALUATION:
(1) Iron ore can be found in ------------------
WEEKEND ASSIGNMENT
Objective Test:
1. Mineral resources can be classified into ------- (a) solid and solid (b) solid and gold (c) solid and non-solid (d) oil and gases
2. --------------are substances that are formed naturally in the earth (a) Bitumen (b) Oil (c) mineral resources (d) Gold
3. ---------- is the process by which minerals are extracted or removed from the earth. (a) Mineral resources (b) Coal (c)Bitumen (d) Mining
4. -------------- is the main source of the country’s foreign exchange (a) oil account (b) foreign account (c) Mining account (d) Gold account
5. The following are the importance of mining industry except. (a)sources of government revenue (b) employment generation (c) sources of energy (d) Establishment of militant
Essay Questions:
1. Draw a map of Nigeria and locate where the following minerals can be found. Gold, Bitumen, Iron Ore, Coal, Columbine.
2. What is the importance of mineral resources in Nigeria?
3. Distinguish between mineral resources and mining.
4. Define Mining.
5. Differentiate between solid and non-solid minerals.
PRE-READING ASSIGNMENT: Read about money and capital market.
WEEKEND ACTIVITIES:
Draw a map of Nigeria and locate where the following minerals can be found. Gold, Bitumen, Iron Ore, Coal, Columbine
REFERENCE TEXTS:
MelsroseEconomics for senior secondary school Book 1 by M.A. Shittu et al; Melrose Books and publishing Limited.
WEEK 2
FINANCIAL INSTITUTIONS
Content
1. Meaning and segments of financial systems
2. Money and capital markets
3. Benefits of capital market.
Sub-topic 1: Meaning and segments of Financial Systems
A financial system or market is a market where money and near money instruments exchange hand between lenders and borrowers. That is, the market deals in money.
Financial market provides opportunities for financial institutions to make facilities available for borrowers and lenders. Therefore, financial institutions trade in money and money worth.
Segments/Types of Financial market
Financial markets are broadly divided into two categories and they are as follows:
(a) Money market (b) Capital market
MONEY MARKET
Money market may be defined as a financial market for the lending and borrowing of short-term loans. This type of market aids all forms of business transactions. A lot of financial institutions are involved in this type of market, purchase and sale of funds on short-term bases and it is controlled by the Central Bank.
USES/IMPORTANCE/ FUNCTIONS OF THE MONEY MARKET
a. Provision of short-term capital to investors in both the private and publics sectors
b. Provision of short-term investment opportunities from which income may be earned
c. Mobilization of saving for investment.
d. Provision of investment, technical and managerial advice.
e. Provision of opportunity for the public to participate in the management of the economy.
INSTITUTIONS INVOLVED IN THE MONEY MARKETS
(1) The Central Bank: It makes money available to money market and capital market as a lender of the last resort.
(2) Commercial Banks: They offer short term loans to individuals, organizations, governments, etc.
(3) Discount Houses: These are institutions that offer discount, by buying and selling bills of exchange and treasury bills.
(4) Acceptance Houses
(5) Financial Companies
(6) Hire purchase companies
The money market uses certain financial instruments to transfer money from lenders to borrowers. These are treasury bills, treasury certificates, bills of exchange and money at call.
EVALUATION:
1. What is money market?
2. Enumerate five functions of the money market
Sub-Topic 2: The Capital Market
The market is made up of financial institutions which deal in long term financing. The capital market provides medium and long term loans for investment. They therefore bring long term lenders and borrowers together. Loans given are usually for more than two years. Institutions that operate in this market include:
1. Insurance Companies
2. Issuing Houses
3. Development Banks
4. Investment Banks
5. Investment Trusts
6. Building Society or Mortgage Bank
7. Finance Corporations
8. Savings Banks
9. The Stock Exchange
Financial instruments used in the capital market to finance long term investments are stocks and shares, company bonds and government bonds.
The capital market can be divided into the primary market and secondary market. The primary market deals with the buying and selling of new securities. It is dominated by merchant banks. The secondary market is the market that deals with the buying and selling of old (secondhand) securities. It is dominated by Stock Exchange.
IMPORTANCE/FUNCTIONS/ BENEFITS OF THE CAPITAL MARKET
1. Provision of long term capital to investors both in the public and private sector.
2. Provision of long term investment opportunities from which income may be earned.
3. Mobilization of savings for investment.
4. Encourages the growth of merchant banking.
5. Provision of investment advice.
6. Provision of opportunity to the public to participate in running of the economy.
EVALUATION:
(1) What is capital market?
(2) List five institutions that operate in capital market
WEEKEND ASSIGNMENT:
Objective Test:
(1) Financial system or market is a market where money and near money instruments exchange hand between………… (a)buyers and sellers (b) wholesalers and retailers (c) lenders and borrowers (d) demand and supply.
(2) Financial markets are broadly divided into ……………… (a) Money and Money market (b) Capital and Capital market (c) Financial and capital market (d) Money and capital market.
(3) Money market has to do with……………. (a) Long term loan (b) short-term loans (c) Medium term loan (d) 1 to 5years term loan
(4) Loans given in capital market are usually for …………….. (a) less than two years (b)more than two years (c)less than or equal to two years (d) minus two years.
(5) The following are the benefits of capital market except (a) Mobilization of savings for investment (b)Encouragement of the growth of central banking (c)Provision of investment advice (d)Provision of opportunity to the public to participate in running of the economy.
EssayQuestions:
1. What is money market?
2. Enumerate five functions of money market.
3. What is capital market?
4. List five institutions that operate in capital market.
5. Mention five benefits of capital market.
PRE-READING ASSIGNMENT
Read historical development and functions of money
WEEKEND ACTIVITIES
Differentiate between instruments used in capital and money market
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
1. Meaning and segments of financial systems
2. Money and capital markets
3. Benefits of capital market.
Sub-topic 1: Meaning and segments of Financial Systems
A financial system or market is a market where money and near money instruments exchange hand between lenders and borrowers. That is, the market deals in money.
Financial market provides opportunities for financial institutions to make facilities available for borrowers and lenders. Therefore, financial institutions trade in money and money worth.
Segments/Types of Financial market
Financial markets are broadly divided into two categories and they are as follows:
(a) Money market (b) Capital market
MONEY MARKET
Money market may be defined as a financial market for the lending and borrowing of short-term loans. This type of market aids all forms of business transactions. A lot of financial institutions are involved in this type of market, purchase and sale of funds on short-term bases and it is controlled by the Central Bank.
USES/IMPORTANCE/ FUNCTIONS OF THE MONEY MARKET
a. Provision of short-term capital to investors in both the private and publics sectors
b. Provision of short-term investment opportunities from which income may be earned
c. Mobilization of saving for investment.
d. Provision of investment, technical and managerial advice.
e. Provision of opportunity for the public to participate in the management of the economy.
INSTITUTIONS INVOLVED IN THE MONEY MARKETS
(1) The Central Bank: It makes money available to money market and capital market as a lender of the last resort.
(2) Commercial Banks: They offer short term loans to individuals, organizations, governments, etc.
(3) Discount Houses: These are institutions that offer discount, by buying and selling bills of exchange and treasury bills.
(4) Acceptance Houses
(5) Financial Companies
(6) Hire purchase companies
The money market uses certain financial instruments to transfer money from lenders to borrowers. These are treasury bills, treasury certificates, bills of exchange and money at call.
EVALUATION:
1. What is money market?
2. Enumerate five functions of the money market
Sub-Topic 2: The Capital Market
The market is made up of financial institutions which deal in long term financing. The capital market provides medium and long term loans for investment. They therefore bring long term lenders and borrowers together. Loans given are usually for more than two years. Institutions that operate in this market include:
1. Insurance Companies
2. Issuing Houses
3. Development Banks
4. Investment Banks
5. Investment Trusts
6. Building Society or Mortgage Bank
7. Finance Corporations
8. Savings Banks
9. The Stock Exchange
Financial instruments used in the capital market to finance long term investments are stocks and shares, company bonds and government bonds.
The capital market can be divided into the primary market and secondary market. The primary market deals with the buying and selling of new securities. It is dominated by merchant banks. The secondary market is the market that deals with the buying and selling of old (secondhand) securities. It is dominated by Stock Exchange.
IMPORTANCE/FUNCTIONS/ BENEFITS OF THE CAPITAL MARKET
1. Provision of long term capital to investors both in the public and private sector.
2. Provision of long term investment opportunities from which income may be earned.
3. Mobilization of savings for investment.
4. Encourages the growth of merchant banking.
5. Provision of investment advice.
6. Provision of opportunity to the public to participate in running of the economy.
EVALUATION:
(1) What is capital market?
(2) List five institutions that operate in capital market
WEEKEND ASSIGNMENT:
Objective Test:
(1) Financial system or market is a market where money and near money instruments exchange hand between………… (a)buyers and sellers (b) wholesalers and retailers (c) lenders and borrowers (d) demand and supply.
(2) Financial markets are broadly divided into ……………… (a) Money and Money market (b) Capital and Capital market (c) Financial and capital market (d) Money and capital market.
(3) Money market has to do with……………. (a) Long term loan (b) short-term loans (c) Medium term loan (d) 1 to 5years term loan
(4) Loans given in capital market are usually for …………….. (a) less than two years (b)more than two years (c)less than or equal to two years (d) minus two years.
(5) The following are the benefits of capital market except (a) Mobilization of savings for investment (b)Encouragement of the growth of central banking (c)Provision of investment advice (d)Provision of opportunity to the public to participate in running of the economy.
EssayQuestions:
1. What is money market?
2. Enumerate five functions of money market.
3. What is capital market?
4. List five institutions that operate in capital market.
5. Mention five benefits of capital market.
PRE-READING ASSIGNMENT
Read historical development and functions of money
WEEKEND ACTIVITIES
Differentiate between instruments used in capital and money market
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 3
TOPIC: MONEY
Content
a. Definition and meaning of money
b. Historical development of money
c. Functions of money
Sub-Topic 2: Definition and Meaning of Money
Money may be defined as anything that is generally acceptable as a medium of exchange for making payments, settlement of debts or other business obligations. Before the introduction of money, the type of exchange that took place wastrade-by-barter.
TRADE BY BARTER
Definition: Trade by barter may be defined as direct system and practice of exchanging goods for goods and services for services.
PROBLEMS/DIFFICULTIES/ DISADVANTAGES OF TRADE BY BARTER
(1) The difficulty of double coincidence of wants
(2) It waste time and energy
(3) Difficulty in assessing the value the value of commodities
(4) Exchange become uninteresting and unexciting
(5) It does not encourage large quantity and variety purchases
(6) It does not encourage deferred payment
(7) It does not encourage installment payments
(8) It does not encourage division of labor
(9) There is no lending and borrowing
(10) It discourage large scale production
(11) Miscellaneous problem: These difficulties include: the non-durability, portability, divisibility, homogeneity; of the commodities that were used in exchange under trade by barter.
HISTORICAL DEVELOPMENT OF MONEY
Money and bank have common ancestor –goldsmith. The paper money presently in use, originated from the receipts the goldsmiths issued to people who kept gold and other valuables with them. In the olden days, when there were no banks, people kept their gold and other valuables with the goldsmith. As the name indicates, the goldsmith deals with gold which is a very valuable and rare commodity. Because of the costly nature of gold, the goldsmith had a place called strong-room where gold and other valuable commodities and documents were kept for safe custody.
With his strong-room, the goldsmith started receiving valuable commodities from people for safe-keeping. Receipts were issued to those who deposited their valuable as evidence and they paid the goldsmith for his services. As time went on, people started using the receipts issued by the goldsmith for the exchange of goods and services since they will be honored by the goldsmith on presentation. When the goldsmith discovered that some people who deposited valuables with him do come for them in a short period of time, he started enticing others in form of interest to deposit their gold and other valuables with him. He(goldsmith) also started lending these valuable commodities out to other people on short term basis on interest rate. This exchange of goods and services with the receipts issued by the goldsmith continued until the receipts were modernized and re-named money. Today, money has another form other than the paper money, called coin. We also have other forms as representative or token money. The origin of money really came as the aftermath of the difficulties or problems of trade by barter. People were forced to fashion out a generally acceptable means of exchange through a long process of trial and error.
Today, money has come to replace that cumbersome means of exchange called trade by barter. It does not mean that money drove in the final nail on the coffin of trade by barter because the trade of exchange of goods for goods and services for services has been baptized and called counter-trade. Such play on words is in perfect character with the improbable science called Economics.
EVALUATION:
1. What is money?
2. What is trade by barter?
3. List five problems of barter system.
Sub-Topic 2:FUNCTIONS OF MONEY
The functions of money are the following:
1. A medium of exchange: With money, you no longer need to look for somebody who has what you want and who at the same time wants what you want. Instead, money is used as a means of payment for goods and services and for the settlement of debt.
2. It measures values of goods and service: Money is therefore a parameter for determining the worth of gods and services
3. A store of values: Money is now used in storing wealth, unless there is inflation, money stored or saved retains its values for many years.
4. A standard of Deferred Payment: As a result of the durability of money, one can buy some commodities now and pay in future
5. A Unit of Account: Money makes accounting possible because the worth of goods and services is measured in money.
6. Money commands Variety: The existence of money encourages large quantity and variety purchases of goods and services
7. Money encourages Installment Payments: This is possible because money is divisible.
8. Money encourages division of labor: With the existence of money, people tend to concentrate on certain occupations and aspects of production processes, leaving other aspects to other people, with the hope of buying the commodities with money they will earn as the reward for their services.
9. Encouragement of lending and borrowing: The existence of money gave rise to bank loans and overdrafts and other forms of lending and borrowing.
EVALUATION:
(1) List five functions of money and explain them
(2) How does money solve problem of deferred payment with barter system
WEEKEND ASSIGNMENT
Objective Test:
1. The indicator of the value of money in the market is …….. (a) the general price level (b) effective supply (c) the equilibrium price (d) effective demand (e)consumer’s income
2. The greatest disadvantage of the barter system is the need for ………. (a) durability (b) divisibility (c) homogeneity (d) portability (e)double coincidence of wants
3. Which of the following is not regarded as money in Economics? (a) coins (b) currency note (c) bank deposits (d) cheque (e)naira and kobo
4. Money as a unit of account implies that it can be …….. (a) counted in units (b) used to facility exchange (c) used to measure the value of goods and services (d) used to store goods and services(e)used for future payment
EssayQuestions:
1. What is money? Explain its characteristics (WAEC1994 question 8)
2. Identify the main forms of money and explain its functions.
3. State any five reasons why the use of money has replaced the barter system in modern economic transactions. (WAEC 1998 Question 7)
4. Outline any four problems of barter economy(WASSCE JUNE 2013, QUESTION 12B)
PRE-READING ASSIGNMENT
Read about types and qualities of money
WEEKEND ACTIVITIES
Explain the advantages of money over barter system
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
a. Definition and meaning of money
b. Historical development of money
c. Functions of money
Sub-Topic 2: Definition and Meaning of Money
Money may be defined as anything that is generally acceptable as a medium of exchange for making payments, settlement of debts or other business obligations. Before the introduction of money, the type of exchange that took place wastrade-by-barter.
TRADE BY BARTER
Definition: Trade by barter may be defined as direct system and practice of exchanging goods for goods and services for services.
PROBLEMS/DIFFICULTIES/ DISADVANTAGES OF TRADE BY BARTER
(1) The difficulty of double coincidence of wants
(2) It waste time and energy
(3) Difficulty in assessing the value the value of commodities
(4) Exchange become uninteresting and unexciting
(5) It does not encourage large quantity and variety purchases
(6) It does not encourage deferred payment
(7) It does not encourage installment payments
(8) It does not encourage division of labor
(9) There is no lending and borrowing
(10) It discourage large scale production
(11) Miscellaneous problem: These difficulties include: the non-durability, portability, divisibility, homogeneity; of the commodities that were used in exchange under trade by barter.
HISTORICAL DEVELOPMENT OF MONEY
Money and bank have common ancestor –goldsmith. The paper money presently in use, originated from the receipts the goldsmiths issued to people who kept gold and other valuables with them. In the olden days, when there were no banks, people kept their gold and other valuables with the goldsmith. As the name indicates, the goldsmith deals with gold which is a very valuable and rare commodity. Because of the costly nature of gold, the goldsmith had a place called strong-room where gold and other valuable commodities and documents were kept for safe custody.
With his strong-room, the goldsmith started receiving valuable commodities from people for safe-keeping. Receipts were issued to those who deposited their valuable as evidence and they paid the goldsmith for his services. As time went on, people started using the receipts issued by the goldsmith for the exchange of goods and services since they will be honored by the goldsmith on presentation. When the goldsmith discovered that some people who deposited valuables with him do come for them in a short period of time, he started enticing others in form of interest to deposit their gold and other valuables with him. He(goldsmith) also started lending these valuable commodities out to other people on short term basis on interest rate. This exchange of goods and services with the receipts issued by the goldsmith continued until the receipts were modernized and re-named money. Today, money has another form other than the paper money, called coin. We also have other forms as representative or token money. The origin of money really came as the aftermath of the difficulties or problems of trade by barter. People were forced to fashion out a generally acceptable means of exchange through a long process of trial and error.
Today, money has come to replace that cumbersome means of exchange called trade by barter. It does not mean that money drove in the final nail on the coffin of trade by barter because the trade of exchange of goods for goods and services for services has been baptized and called counter-trade. Such play on words is in perfect character with the improbable science called Economics.
EVALUATION:
1. What is money?
2. What is trade by barter?
3. List five problems of barter system.
Sub-Topic 2:FUNCTIONS OF MONEY
The functions of money are the following:
1. A medium of exchange: With money, you no longer need to look for somebody who has what you want and who at the same time wants what you want. Instead, money is used as a means of payment for goods and services and for the settlement of debt.
2. It measures values of goods and service: Money is therefore a parameter for determining the worth of gods and services
3. A store of values: Money is now used in storing wealth, unless there is inflation, money stored or saved retains its values for many years.
4. A standard of Deferred Payment: As a result of the durability of money, one can buy some commodities now and pay in future
5. A Unit of Account: Money makes accounting possible because the worth of goods and services is measured in money.
6. Money commands Variety: The existence of money encourages large quantity and variety purchases of goods and services
7. Money encourages Installment Payments: This is possible because money is divisible.
8. Money encourages division of labor: With the existence of money, people tend to concentrate on certain occupations and aspects of production processes, leaving other aspects to other people, with the hope of buying the commodities with money they will earn as the reward for their services.
9. Encouragement of lending and borrowing: The existence of money gave rise to bank loans and overdrafts and other forms of lending and borrowing.
EVALUATION:
(1) List five functions of money and explain them
(2) How does money solve problem of deferred payment with barter system
WEEKEND ASSIGNMENT
Objective Test:
1. The indicator of the value of money in the market is …….. (a) the general price level (b) effective supply (c) the equilibrium price (d) effective demand (e)consumer’s income
2. The greatest disadvantage of the barter system is the need for ………. (a) durability (b) divisibility (c) homogeneity (d) portability (e)double coincidence of wants
3. Which of the following is not regarded as money in Economics? (a) coins (b) currency note (c) bank deposits (d) cheque (e)naira and kobo
4. Money as a unit of account implies that it can be …….. (a) counted in units (b) used to facility exchange (c) used to measure the value of goods and services (d) used to store goods and services(e)used for future payment
EssayQuestions:
1. What is money? Explain its characteristics (WAEC1994 question 8)
2. Identify the main forms of money and explain its functions.
3. State any five reasons why the use of money has replaced the barter system in modern economic transactions. (WAEC 1998 Question 7)
4. Outline any four problems of barter economy(WASSCE JUNE 2013, QUESTION 12B)
PRE-READING ASSIGNMENT
Read about types and qualities of money
WEEKEND ACTIVITIES
Explain the advantages of money over barter system
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 4
TOPIC: MONEY - Types and Characteristics of Money
Content
1. Types of money
2. Characteristics/ qualities of money
Sub-Topic 2: Types of Money
(1) Coins: A coin is metal money with definite amount and weight issued and stamped by the central authority responsible for the issuance.The coins in use are kobo and naira, which are in different denominations.
(2) Paper Money: As the name indicates, it is in form of paper note which originated from receipts the goldsmiths issued to people who kept gold and other valuables with them.
(3) Bank money: This is the money one keeps in one’s bank account for safe-keeping, also called bank deposit which can be given back to the owner on demand.
(4) Foreign money: It is the money of other countries of the world which serves as money in the foreign exchange market. Some of the most popular foreign exchange are : Dollar, Pounds sterling, Deutschmark, etc., and they enable a citizen of a country to buy items from other countries where he is resident at the time.
(5) Token Money: This is money whose intrinsic worth is less than its nominal or face value. That is, its value as a piece of metal or note is not identical with its value as piece of money. Britain’s silver coins were replaced with coins of curpo-nickel because their value rose above their face value or purchasing power value as a result of high rise in the value of silver during the two world wars. As a result of the rise in value of silver, there was danger that the silver coins might be illegally melted.
(6) Commodity Money: Different commodities were used in different parts of the world as medium of exchange and they are presently called commodity money. These have two values as money and as commodities. These commodities include: cowries, gold, diamond, silver, shark teeth, cows, manilas etc., and presently some of them have gone into oblivion as media of exchange.
(7) Gold-Backed Money: This is money that can easily be converted or changed into gold by the central authority that issues money if its holder so desires. This system of exchanging paper notes or coins for gold originate from the goldsmith who assured people that the receipt they issued to them can easily be exchanged for gold. Nigerian currency before it was decimalized was tied to gold and it was clearly expressed on its face.
(8) Legal Tender: A legal tender is money which is backed with the force of law in a country which makes it generally acceptable as a medium of exchange. It is an offence for anybody in a country to reject a legal tender. However, some forms of legal tender have limit in their legality; for instance, in Nigeria, Naira and Kobo serve as legal tender. Kobo which are in form of coins serve as legal tender to some extent.
(9) Fiduciary Note Issue: This is the type of money that is not backed by either gold or any foreign currency. Acceptance of fiduciary note issue is based on faith and not because it is backed by gold or any strong currency like dollar or pounds sterling.
(10) Representative Money: This is a document or instrument used in lieu of legal tender but not fully and freely acceptable. Document or instrument like cheque, postal and money orders, stamps, promissory notes, bills of exchange, etc., that sometimes act as money are called representative money. These documents are not backed by the force of law to be generally acceptable and therefore, are not legal tender (money). However, there representative money remove the hazard involved in carrying physical cash and also ease transfer of money from one place to another.
REPRESENTATIVE MONEY AND MEANS OF PAYMENT
These are materials or articles used as money but not backed up by law, generally acceptable and legal tender. They also lack qualities possessed by money. They serve as a means of payment to some extent and ease the burden of carrying physical cash which is hazardous. They include; Cheques, Postal order, Money order, Postal order, Bank Order or Standing Order, Bankdrafts, Credit Transfer, Certified cheque, Mail and Telegraphic Transfers, Promissory Note, Bill of Exchange.
EVALUATION:
(1) List five types of money
(2) Differentiate between representative and commodity money
Sub-Topic Two: Characteristics of Money
The following are the characteristics of money
1. General Acceptability: It must be acceptable to the people of that country, community or a certain territorial area.
2. Absolute Homogeneity: The article used as money must be the same in all parts of the country where it is beingaccepted as a medium of exchange.
3. Easily Recognizable: It is this quality that make people to detect which is the real and which is the counterfeit money.
4. Divisibility: It must be capable of being divided into smaller units which facilitates exchange of goods and services.
5. Portability: Money must be something that can be easily carried about from one place to another.
6. Relatively scarce: Money should not be in excess or too much in circulation or easy to come by otherwise, it will lose its value.
7. Durability: An article that serves as money must be something that can stand the test of time and not something that will suffer from wear and tear.
8. Stability: This stability in value of money makes business to be predictable and encourages lending and borrowing of money
9. Storability: It must be something that can be stored for a long time, without losing its value.
10. Malleability: Anything that will serve as money must be something that can be stamped and designed to show its value and origin.
11. No intrinsic Value: The commodity that will serve as money should have little or no value in itself as opposed to its value of exchange.
12. Cheap to Maintain: Money must have the quality of costing nothing to keep and maintain.
13. Controllable Supply: Money must have controllable supply which will make it easy for the sole authority i.e. CBN to monitor the quantity in circulation.
EVALUATION:
(1) List five qualities of money
(2) Explain the relatively scarcity characteristic of money in relation to its being in controllable supply.
WEEKEND ASSIGNMENT
Objective Test:
1. Money supply at any given point in time refers to…........ (a) minted money (b) hoarded money (c) Money received as gift (d) notes and coins only (e)banknotes, coins and demand deposits.
2. Which of the following is not a characteristic of money? (a) scarcity (b) durability (c) divisibility (d) homogeneity (e)mobility
3. The money system that requires a double coincidence of wants is known as the……… (a) Gold standard (b) barter system (c) commodity system (d) gold exchange system (e) goldsmith system.
4. A legal tender is any---- (a) form of money (b) means of exchange authorized by the state (c) commodity general acceptable as a medium of exchange (d)portable and acceptable means of exchange (e)foreign currencies that are allowed for buying imported goods
EssayQuestions:
List five types of money.
1. Differentiate between representative and commodity money.
2. List five qualities of money.
3. Explain the relatively scarcity characteristic of money in relation to be in controllable supply.
PRE-READING ASSIGNMENT
Read about Distributive Trade
WEEKEND ACTIVITIES
(1) What do you understand by fiduciary issue?
(2) Distinguish between convertible and inconvertible money
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
1. Types of money
2. Characteristics/ qualities of money
Sub-Topic 2: Types of Money
(1) Coins: A coin is metal money with definite amount and weight issued and stamped by the central authority responsible for the issuance.The coins in use are kobo and naira, which are in different denominations.
(2) Paper Money: As the name indicates, it is in form of paper note which originated from receipts the goldsmiths issued to people who kept gold and other valuables with them.
(3) Bank money: This is the money one keeps in one’s bank account for safe-keeping, also called bank deposit which can be given back to the owner on demand.
(4) Foreign money: It is the money of other countries of the world which serves as money in the foreign exchange market. Some of the most popular foreign exchange are : Dollar, Pounds sterling, Deutschmark, etc., and they enable a citizen of a country to buy items from other countries where he is resident at the time.
(5) Token Money: This is money whose intrinsic worth is less than its nominal or face value. That is, its value as a piece of metal or note is not identical with its value as piece of money. Britain’s silver coins were replaced with coins of curpo-nickel because their value rose above their face value or purchasing power value as a result of high rise in the value of silver during the two world wars. As a result of the rise in value of silver, there was danger that the silver coins might be illegally melted.
(6) Commodity Money: Different commodities were used in different parts of the world as medium of exchange and they are presently called commodity money. These have two values as money and as commodities. These commodities include: cowries, gold, diamond, silver, shark teeth, cows, manilas etc., and presently some of them have gone into oblivion as media of exchange.
(7) Gold-Backed Money: This is money that can easily be converted or changed into gold by the central authority that issues money if its holder so desires. This system of exchanging paper notes or coins for gold originate from the goldsmith who assured people that the receipt they issued to them can easily be exchanged for gold. Nigerian currency before it was decimalized was tied to gold and it was clearly expressed on its face.
(8) Legal Tender: A legal tender is money which is backed with the force of law in a country which makes it generally acceptable as a medium of exchange. It is an offence for anybody in a country to reject a legal tender. However, some forms of legal tender have limit in their legality; for instance, in Nigeria, Naira and Kobo serve as legal tender. Kobo which are in form of coins serve as legal tender to some extent.
(9) Fiduciary Note Issue: This is the type of money that is not backed by either gold or any foreign currency. Acceptance of fiduciary note issue is based on faith and not because it is backed by gold or any strong currency like dollar or pounds sterling.
(10) Representative Money: This is a document or instrument used in lieu of legal tender but not fully and freely acceptable. Document or instrument like cheque, postal and money orders, stamps, promissory notes, bills of exchange, etc., that sometimes act as money are called representative money. These documents are not backed by the force of law to be generally acceptable and therefore, are not legal tender (money). However, there representative money remove the hazard involved in carrying physical cash and also ease transfer of money from one place to another.
REPRESENTATIVE MONEY AND MEANS OF PAYMENT
These are materials or articles used as money but not backed up by law, generally acceptable and legal tender. They also lack qualities possessed by money. They serve as a means of payment to some extent and ease the burden of carrying physical cash which is hazardous. They include; Cheques, Postal order, Money order, Postal order, Bank Order or Standing Order, Bankdrafts, Credit Transfer, Certified cheque, Mail and Telegraphic Transfers, Promissory Note, Bill of Exchange.
EVALUATION:
(1) List five types of money
(2) Differentiate between representative and commodity money
Sub-Topic Two: Characteristics of Money
The following are the characteristics of money
1. General Acceptability: It must be acceptable to the people of that country, community or a certain territorial area.
2. Absolute Homogeneity: The article used as money must be the same in all parts of the country where it is beingaccepted as a medium of exchange.
3. Easily Recognizable: It is this quality that make people to detect which is the real and which is the counterfeit money.
4. Divisibility: It must be capable of being divided into smaller units which facilitates exchange of goods and services.
5. Portability: Money must be something that can be easily carried about from one place to another.
6. Relatively scarce: Money should not be in excess or too much in circulation or easy to come by otherwise, it will lose its value.
7. Durability: An article that serves as money must be something that can stand the test of time and not something that will suffer from wear and tear.
8. Stability: This stability in value of money makes business to be predictable and encourages lending and borrowing of money
9. Storability: It must be something that can be stored for a long time, without losing its value.
10. Malleability: Anything that will serve as money must be something that can be stamped and designed to show its value and origin.
11. No intrinsic Value: The commodity that will serve as money should have little or no value in itself as opposed to its value of exchange.
12. Cheap to Maintain: Money must have the quality of costing nothing to keep and maintain.
13. Controllable Supply: Money must have controllable supply which will make it easy for the sole authority i.e. CBN to monitor the quantity in circulation.
EVALUATION:
(1) List five qualities of money
(2) Explain the relatively scarcity characteristic of money in relation to its being in controllable supply.
WEEKEND ASSIGNMENT
Objective Test:
1. Money supply at any given point in time refers to…........ (a) minted money (b) hoarded money (c) Money received as gift (d) notes and coins only (e)banknotes, coins and demand deposits.
2. Which of the following is not a characteristic of money? (a) scarcity (b) durability (c) divisibility (d) homogeneity (e)mobility
3. The money system that requires a double coincidence of wants is known as the……… (a) Gold standard (b) barter system (c) commodity system (d) gold exchange system (e) goldsmith system.
4. A legal tender is any---- (a) form of money (b) means of exchange authorized by the state (c) commodity general acceptable as a medium of exchange (d)portable and acceptable means of exchange (e)foreign currencies that are allowed for buying imported goods
EssayQuestions:
List five types of money.
1. Differentiate between representative and commodity money.
2. List five qualities of money.
3. Explain the relatively scarcity characteristic of money in relation to be in controllable supply.
PRE-READING ASSIGNMENT
Read about Distributive Trade
WEEKEND ACTIVITIES
(1) What do you understand by fiduciary issue?
(2) Distinguish between convertible and inconvertible money
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 5
TOPIC: DISTRIBUTIVE TRADE
Content
1. Definition, Processes and Channels of distribution
2. Roles of Wholesalers and Retailers
Sub-Topic One: Definition, Processes and Channels of Distribution
Definition: The term distributive trade or chain of distribution simply refers to the various stages which finished products pass before reaching the final consumers.
Process of Distribution
The process of distribution implies the series of activities that take place in the task of bridging the gap between the manufacturers and the consumers. These activities includes
Merchandising
Packaging
Storage
Transportation
Advertising
Channels of Distribution
The channel of distribution is the route taken as products move from the manufacturer to the final consumers. The ultimate goal of the distributive activities is to enable products produced get to the consumers without any damage to the quality.
Manufacturer-----Wholesaler-----Retailer-----Consumer
EVALUATION:
(1) Give a clear analysis of the distributive process
(2) What is distributive trade?
Sub-Topic 2: THE WHOLESALER
The wholesaler is a middleman who purchases in bulk from the manufacturer and sells in small quantities to the retailer. The wholesaler is essential in the channel of distribution.
Role of the Wholesaler: The wholesaler plays a major role to the manufacturer, the retailer and the consumer.
(1) Role of the Wholesaler to the Manufacturer
a. Bulk Breaking
b. Risk Bearing
c. Provision of Warehouse Facilities
d. Price Stability
e. Branding and Packaging
f. Transportation
g. Keeping Manufacturer informed
h. Financing Production
i. Advertising and Marketing
(2) Role of the Wholesaler to the Retailer
a. Provision of variety of goods
b. Provision of credit Facility
c. Price Stability
d. Grading and packaging
e. Transportation
f. Advising the retailer
g. Advertising the Product
3. Role of the Wholesaler to the consumer
• Variety of Goods
• Price Stability
THE RETAILER
The retailer is a vital link in the distributive process. He buys goods from wholesaler and in some cases, directly from the manufacturer and sells to the consumers. As a merchant, he buys in small quantities and sells in smaller units. He puts the goods in the hands of the consumer and thus completes the production process. He works towards marketing the available goods in the right place at the right time.
Role of the Retailer
a. Selling in Small Quantities
b. Availability of Variety of goods
c. Selling at Convenient Time and place
d. Selling in Credit
e. Informing the Wholesaler and Producers
f. Provision of after sales service
g. Advising the Consumer
h. Weighing, Measuring and packaging
EVALUATION:
(1) Who is a Retailer? What roles does he play in the channel of distribution?
(2) List five roles of wholesaler to retailer.
WEEKEND ASSIGNMENT
Objective Test:
1. The most important function of the wholesaler is ……….. (a) Financing production (b) bulk breaking (c) risk bearing (d) price stability
2. The last link in the chain of distribution (a) retailer (b) consumer (c) manufacturing (d) Wholesaler
3. Which of the following functions do retailers perform in an economy (a) production (b) exchange (c) hoarding (d) distribution (e)investment
4. A person who buys in bulk and sells is smaller quantities is a (a) Manufacturer (b) retailer (c) Advertiser (d) Distributor
Essay Questions:
(1) Who is a retailer? What roles does he play in the channel of distribution?
(2) List five roles of wholesaler to retailer
(3) Give a clear analysis of the distributive process
(4) What is distributive trade?
(5) Examine the role of the wholesaler to each of the following
(a) The manufacturer
(b) The retailer
(c) The consumer
PRE-READING ASSIGNMENT
Read about role of cooperative and government agencies in product distribution
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
1. Definition, Processes and Channels of distribution
2. Roles of Wholesalers and Retailers
Sub-Topic One: Definition, Processes and Channels of Distribution
Definition: The term distributive trade or chain of distribution simply refers to the various stages which finished products pass before reaching the final consumers.
Process of Distribution
The process of distribution implies the series of activities that take place in the task of bridging the gap between the manufacturers and the consumers. These activities includes
Merchandising
Packaging
Storage
Transportation
Advertising
Channels of Distribution
The channel of distribution is the route taken as products move from the manufacturer to the final consumers. The ultimate goal of the distributive activities is to enable products produced get to the consumers without any damage to the quality.
Manufacturer-----Wholesaler-----Retailer-----Consumer
EVALUATION:
(1) Give a clear analysis of the distributive process
(2) What is distributive trade?
Sub-Topic 2: THE WHOLESALER
The wholesaler is a middleman who purchases in bulk from the manufacturer and sells in small quantities to the retailer. The wholesaler is essential in the channel of distribution.
Role of the Wholesaler: The wholesaler plays a major role to the manufacturer, the retailer and the consumer.
(1) Role of the Wholesaler to the Manufacturer
a. Bulk Breaking
b. Risk Bearing
c. Provision of Warehouse Facilities
d. Price Stability
e. Branding and Packaging
f. Transportation
g. Keeping Manufacturer informed
h. Financing Production
i. Advertising and Marketing
(2) Role of the Wholesaler to the Retailer
a. Provision of variety of goods
b. Provision of credit Facility
c. Price Stability
d. Grading and packaging
e. Transportation
f. Advising the retailer
g. Advertising the Product
3. Role of the Wholesaler to the consumer
• Variety of Goods
• Price Stability
THE RETAILER
The retailer is a vital link in the distributive process. He buys goods from wholesaler and in some cases, directly from the manufacturer and sells to the consumers. As a merchant, he buys in small quantities and sells in smaller units. He puts the goods in the hands of the consumer and thus completes the production process. He works towards marketing the available goods in the right place at the right time.
Role of the Retailer
a. Selling in Small Quantities
b. Availability of Variety of goods
c. Selling at Convenient Time and place
d. Selling in Credit
e. Informing the Wholesaler and Producers
f. Provision of after sales service
g. Advising the Consumer
h. Weighing, Measuring and packaging
EVALUATION:
(1) Who is a Retailer? What roles does he play in the channel of distribution?
(2) List five roles of wholesaler to retailer.
WEEKEND ASSIGNMENT
Objective Test:
1. The most important function of the wholesaler is ……….. (a) Financing production (b) bulk breaking (c) risk bearing (d) price stability
2. The last link in the chain of distribution (a) retailer (b) consumer (c) manufacturing (d) Wholesaler
3. Which of the following functions do retailers perform in an economy (a) production (b) exchange (c) hoarding (d) distribution (e)investment
4. A person who buys in bulk and sells is smaller quantities is a (a) Manufacturer (b) retailer (c) Advertiser (d) Distributor
Essay Questions:
(1) Who is a retailer? What roles does he play in the channel of distribution?
(2) List five roles of wholesaler to retailer
(3) Give a clear analysis of the distributive process
(4) What is distributive trade?
(5) Examine the role of the wholesaler to each of the following
(a) The manufacturer
(b) The retailer
(c) The consumer
PRE-READING ASSIGNMENT
Read about role of cooperative and government agencies in product distribution
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 6
TOPIC: DISTRIBUTIVE TRADE
Content
a. Roles of cooperative in Product Distribution
b. Roles of Government Agencies in Product distribution
Sub-topic One: Role of Cooperative in Product Distribution
Cooperative society is a business organization in which a group of individuals who have common interest mutually agree to come together to establish, in order to promote their economic activities like production, distribution or marketing of goods and services and provision of other welfare benefits to their members.
In this era of scarcity of essential commodities, government has encouraged the formation of cooperative societies in order to counteract the atrocious activities of hoarders. Consequently, consumers, retails and wholesaler co-operatives societies emerged. These co-operative societies that are mainly found in urban areas perform the following functions in the distribution of goods.
(1) They bring goods nearer to the consumers.
(2) They sell essential goods at affordable prices
(3) They offer credit facilities to consumers
(4) Helping in stabilizing prices of goods
(5) They help in fighting hoarding.
(6) They advise both consumers and producers.
(7) They help in controlling inflation.
(8) They help in completing the process of manufacturing or production of certain goods
EVALUATION:
(1) List five roles of co-operative society in product distribution.
(2) What are cooperative Societies?
Sub-Topic 2: Roles of Government agencies in Product Distribution
A lot of efforts have been made by different government in Nigeria to ensure that essential goods are distributed equitably. The federal government established the Nigeria National Supply Company (NNSC) which has presently gone into oblivion. The following are some of the agencies involved in product distribution
a. Marketing Boards
b. River Basin Authorities
c. Lagos State Bulk Purchasing
d. Imo State Marketing Board
e. Anambra State Distribution Agency (ASDA)
Their Roles
a. They make goods available from areas where they are produced to areas they are needed
b. They sell directly to consumers at controlled price
c. They help in combating inflation through price stabilization
d. They also serve as instrument for combating artificial scarcity created by hoarders.
e. They help producers to produce goods in large quantities.
WEEKEND ASSIGNMENT
(1) List four government agencies that help in product distribution in Nigeria
(2) Mention five roles of government agencies in product distribution
(3) List five roles of co-operative society in product distribution.
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
a. Roles of cooperative in Product Distribution
b. Roles of Government Agencies in Product distribution
Sub-topic One: Role of Cooperative in Product Distribution
Cooperative society is a business organization in which a group of individuals who have common interest mutually agree to come together to establish, in order to promote their economic activities like production, distribution or marketing of goods and services and provision of other welfare benefits to their members.
In this era of scarcity of essential commodities, government has encouraged the formation of cooperative societies in order to counteract the atrocious activities of hoarders. Consequently, consumers, retails and wholesaler co-operatives societies emerged. These co-operative societies that are mainly found in urban areas perform the following functions in the distribution of goods.
(1) They bring goods nearer to the consumers.
(2) They sell essential goods at affordable prices
(3) They offer credit facilities to consumers
(4) Helping in stabilizing prices of goods
(5) They help in fighting hoarding.
(6) They advise both consumers and producers.
(7) They help in controlling inflation.
(8) They help in completing the process of manufacturing or production of certain goods
EVALUATION:
(1) List five roles of co-operative society in product distribution.
(2) What are cooperative Societies?
Sub-Topic 2: Roles of Government agencies in Product Distribution
A lot of efforts have been made by different government in Nigeria to ensure that essential goods are distributed equitably. The federal government established the Nigeria National Supply Company (NNSC) which has presently gone into oblivion. The following are some of the agencies involved in product distribution
a. Marketing Boards
b. River Basin Authorities
c. Lagos State Bulk Purchasing
d. Imo State Marketing Board
e. Anambra State Distribution Agency (ASDA)
Their Roles
a. They make goods available from areas where they are produced to areas they are needed
b. They sell directly to consumers at controlled price
c. They help in combating inflation through price stabilization
d. They also serve as instrument for combating artificial scarcity created by hoarders.
e. They help producers to produce goods in large quantities.
WEEKEND ASSIGNMENT
(1) List four government agencies that help in product distribution in Nigeria
(2) Mention five roles of government agencies in product distribution
(3) List five roles of co-operative society in product distribution.
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 7
DISTRIBUTIVE TRADE
Content
Problems of Product Distribution and Ways of Improvement
Sub-Topic 1: Problems of Distribution of commodities in West Africa
The Middlemen
The middlemen are wholesalers and retailers who are in-between the manufacturer and the consumers in the production and distribution of goods. These middlemen do encounter lots of problems in the course of the distribution of commodities inWest Africa
TYPES OF WAREHOUSE
A. Ordinary Warehouse
B. Bonded Warehouse
C. State Warehouse
PROBLEMS OF DISTRIBUTION AND MARKETING OF COMMODITIES IN WEST AFRICA
(1) Inadequate infrastructural facilities
(2) Inadequate storage
(3) Hoarding and speculation.
(4) Packaging problem.
(5) Inadequate transport system.
(6) Long chain of distribution.
(7) Insecurity on the roads.
(8) Inadequate information.
(9) Administrative bottlenecks in the collection and handling of goods
WAYS OF IMPROVING THE SYSTEM OF DISTRIBUTION OF CONSUMER GOODS IN WEST AFRICA
(1) Construction of good road.
(2) Improving the communication system
(3) Provision of adequate storage facilities
(4) Establishment of more market
(5) Reduction in number of middlemen
(6) Offering credit facilities
(7) Formation of consumer co-operative societies
WEEKEND ASSIGNMENT:
(1) Give reasons why middlemen should be eliminated in the chain of distribution
(2) Outline the problems experienced in the process of distributing consumer goods in Nigeria
(3) Outline the main chain of distribution of goods and explain the importance of each stage.
(4) Suggest ways of improving the system of distribution of consumergoods in any one West African country.
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
Problems of Product Distribution and Ways of Improvement
Sub-Topic 1: Problems of Distribution of commodities in West Africa
The Middlemen
The middlemen are wholesalers and retailers who are in-between the manufacturer and the consumers in the production and distribution of goods. These middlemen do encounter lots of problems in the course of the distribution of commodities inWest Africa
TYPES OF WAREHOUSE
A. Ordinary Warehouse
B. Bonded Warehouse
C. State Warehouse
PROBLEMS OF DISTRIBUTION AND MARKETING OF COMMODITIES IN WEST AFRICA
(1) Inadequate infrastructural facilities
(2) Inadequate storage
(3) Hoarding and speculation.
(4) Packaging problem.
(5) Inadequate transport system.
(6) Long chain of distribution.
(7) Insecurity on the roads.
(8) Inadequate information.
(9) Administrative bottlenecks in the collection and handling of goods
WAYS OF IMPROVING THE SYSTEM OF DISTRIBUTION OF CONSUMER GOODS IN WEST AFRICA
(1) Construction of good road.
(2) Improving the communication system
(3) Provision of adequate storage facilities
(4) Establishment of more market
(5) Reduction in number of middlemen
(6) Offering credit facilities
(7) Formation of consumer co-operative societies
WEEKEND ASSIGNMENT:
(1) Give reasons why middlemen should be eliminated in the chain of distribution
(2) Outline the problems experienced in the process of distributing consumer goods in Nigeria
(3) Outline the main chain of distribution of goods and explain the importance of each stage.
(4) Suggest ways of improving the system of distribution of consumergoods in any one West African country.
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 8
INSTRUMENTS OF BUSINESS FINANCE
Content
1. Definition of Business finance
2. Basic instruments for Business finance
3. Differences between shares and stocks
4. Sources of fund for Business
Sub-Topic 2: Basic Instruments for Business Finance
DEFINITION OF BUSINESS FINANCE
Business financing involves the sourcing and management of fund by enterprise.
The basic instrument of financing business includes:
a. Shares
b. Debentures
c. Bonds
SHARES:
A Share is the individual portion of a public limited company’s capital owned by a shareholder. Shares are divided into different classes.
i. Ordinary shares
ii. Preferred ordinary shares
iii. Deferred Ordinary shares
iv. Non-voting ordinary shares
v. Preference Shares
1. ORDINARY SHARES
Ordinary shareowners are normally owners of the business who hold the voting control of the company and the right to participate in the profit. They are considered last. They do not have fixed dividend. Their dividends are flexible depending on the performance of the company.
2. PREFERRED ORDINARY SHARES
They are shareowners who have a right to a fixed dividend that must be paid after the payment of dividends to the preference shareholders.
3. DEFERRED ORDINARY SHARES
They are shareowners whose rank for dividend comes after the preferred ordinary shareholders have been considered. They are entitled to profit only after ordinary and preferred ordinary shareowners have been considered.
4. NON-VOTING ORDINARY SHARES
These are those whose equity does not have a vote though they are entitled to a share of the profit.
5. PREFERENCE SHARES
They are those whose owners’ claim must be settled out of profit available for dividend. Also, they must be paid back their capital before any ordinary shareholder in case of winging up.
DIFFERENCES BETWEEN SHARES AND STOCKS
a. Shares are units of capital transferable only in their totality or entirety. Stock is the mass of the capital from which any part is transferable.
b. Shares may be partly paid but stock must be paid full.
c. Shares are usually numbered while stocks are not identified in this way.
DEBENTURE
Debenture is a document issued by a company, acknowledging the fact that the company is liable to pay a specified amount with interest. The amount raised becomes part of the company capital structure. The debenture holder are creditors, they are outsiders and as such have no voting right in the Annual General Meeting.
There are two types of debentures
(1) Convertible debenture
(2) Non-convertible debenture
1. CONVERTIBLE DEBENTURE----- These are debentures which can be converted to equity (that is, they become part of ordinary shareholder), after an agreed term. This benefit makes the interest attached to the debenture to be lower than non-convertible debenture holder.
2. NON-CONVERTIBLE DEBENTURE: As the name implies, the debenture cannot seek to become part of owner of the company by converting their debenture into ordinary shares. They have higher interest rate than the convertible debenture holders.
BONDS
Bond is a debt instrument in which an investor loans money to an entity (corporate or governmental that borrows the fund) for a defined period of time at a fixed interest rate. Bonds are some of the instruments used in the money and capital market to finance short and long term projects and activities. Bonds are otherwise called fixed income securities. This is because they have fixed interest rates.
The issuer will state the interest rates that will be paid and the loaned funds (principal) that are to be returned. The interest is usually paid every six months (semiannually). The bond ranges from 90 days (Treasury bill) to 30 years (government bond).
Sub-Topic 2: Sources of Fund for Business
Finance represents a very important ingredient for the survival of a business venture. Most of the time the amount that the owner of business started with as take-off grant may not be enough for needed business expansion. Hence, there is need to know other sources of fund available.
We can classify the sources of finance into three.
(1) Short term sources—due within one year repayment
(2) Medium term sources—due in more than one year but within three years repayment
(3) Long term sources—available for five or more years
The following are specific sources of fund open to an entrepreneur
(a) Bank overdraft
(b) Self-funding
(c) Personal saving
(d) Loan/contribution
(e) Angel funding or Donation
(f) Venture capital
(g) Hire purchase
(h) Commercial paper
(i) Trade credits/creditors
(j) Debt factoring
(k) Invoice discounting
(l) Bill discounting
(m) Accruals
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
Content
1. Definition of Business finance
2. Basic instruments for Business finance
3. Differences between shares and stocks
4. Sources of fund for Business
Sub-Topic 2: Basic Instruments for Business Finance
DEFINITION OF BUSINESS FINANCE
Business financing involves the sourcing and management of fund by enterprise.
The basic instrument of financing business includes:
a. Shares
b. Debentures
c. Bonds
SHARES:
A Share is the individual portion of a public limited company’s capital owned by a shareholder. Shares are divided into different classes.
i. Ordinary shares
ii. Preferred ordinary shares
iii. Deferred Ordinary shares
iv. Non-voting ordinary shares
v. Preference Shares
1. ORDINARY SHARES
Ordinary shareowners are normally owners of the business who hold the voting control of the company and the right to participate in the profit. They are considered last. They do not have fixed dividend. Their dividends are flexible depending on the performance of the company.
2. PREFERRED ORDINARY SHARES
They are shareowners who have a right to a fixed dividend that must be paid after the payment of dividends to the preference shareholders.
3. DEFERRED ORDINARY SHARES
They are shareowners whose rank for dividend comes after the preferred ordinary shareholders have been considered. They are entitled to profit only after ordinary and preferred ordinary shareowners have been considered.
4. NON-VOTING ORDINARY SHARES
These are those whose equity does not have a vote though they are entitled to a share of the profit.
5. PREFERENCE SHARES
They are those whose owners’ claim must be settled out of profit available for dividend. Also, they must be paid back their capital before any ordinary shareholder in case of winging up.
DIFFERENCES BETWEEN SHARES AND STOCKS
a. Shares are units of capital transferable only in their totality or entirety. Stock is the mass of the capital from which any part is transferable.
b. Shares may be partly paid but stock must be paid full.
c. Shares are usually numbered while stocks are not identified in this way.
DEBENTURE
Debenture is a document issued by a company, acknowledging the fact that the company is liable to pay a specified amount with interest. The amount raised becomes part of the company capital structure. The debenture holder are creditors, they are outsiders and as such have no voting right in the Annual General Meeting.
There are two types of debentures
(1) Convertible debenture
(2) Non-convertible debenture
1. CONVERTIBLE DEBENTURE----- These are debentures which can be converted to equity (that is, they become part of ordinary shareholder), after an agreed term. This benefit makes the interest attached to the debenture to be lower than non-convertible debenture holder.
2. NON-CONVERTIBLE DEBENTURE: As the name implies, the debenture cannot seek to become part of owner of the company by converting their debenture into ordinary shares. They have higher interest rate than the convertible debenture holders.
BONDS
Bond is a debt instrument in which an investor loans money to an entity (corporate or governmental that borrows the fund) for a defined period of time at a fixed interest rate. Bonds are some of the instruments used in the money and capital market to finance short and long term projects and activities. Bonds are otherwise called fixed income securities. This is because they have fixed interest rates.
The issuer will state the interest rates that will be paid and the loaned funds (principal) that are to be returned. The interest is usually paid every six months (semiannually). The bond ranges from 90 days (Treasury bill) to 30 years (government bond).
Sub-Topic 2: Sources of Fund for Business
Finance represents a very important ingredient for the survival of a business venture. Most of the time the amount that the owner of business started with as take-off grant may not be enough for needed business expansion. Hence, there is need to know other sources of fund available.
We can classify the sources of finance into three.
(1) Short term sources—due within one year repayment
(2) Medium term sources—due in more than one year but within three years repayment
(3) Long term sources—available for five or more years
The following are specific sources of fund open to an entrepreneur
(a) Bank overdraft
(b) Self-funding
(c) Personal saving
(d) Loan/contribution
(e) Angel funding or Donation
(f) Venture capital
(g) Hire purchase
(h) Commercial paper
(i) Trade credits/creditors
(j) Debt factoring
(k) Invoice discounting
(l) Bill discounting
(m) Accruals
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited.
WEEK 9
INSTRUMENTS OF BUSINESS FINANCE
Content
1. Problems of business finance in Nigeria
2. Suggested solutions to problems of business finance
in Nigeria
Sub-Topic 2: Problems of Business Finance In Nigeria
Most of the problems encountered by average business in Nigeria are finance centered and this has nosedived or spiraled into other problems as highlighted below:
1. Lack of Funding and Financial Service
Paucity of fund and lack of concerted effort on the part of government to take decisive action to move businesses forward has been one of the militating problems confronting business in Nigeria.
Financial institutions that are supposed to support businesses are not forth coming; they prefer to invest in businesses that are very short-termed. The result is that these businesses are limited in capacity-building; while most of them lay their staff off and relocate to other better business-friendly environment.
2. Poor state of Physical Infrastructure
In spite of limited finance or fund, the average business in Nigeria has scramble for theavailable inadequate infrastructure like water, telecommunication and the transport system.
3. Non-access to medium and long term credit facilities, poor financial intermediation and lack of venture capital.
4. Poor market information and lack of market access.
5. Harsh business operating environment resulting in high cost of doing business and unfair competition from imported goods.
6. High mortality rate of small scale and medium scale business.
7. Weak sectional linkages resulting in lack of synergy liability.
8. Inadequate government support.
9. Lack of data for effective planning.
10. Diversion of fund for unproductive use by business men. Sometimes when this fund is made available the businessmen often divert the fund into other unproductive use. We have had instances when people take bank loans only to celebrate their birthday and sometimes to marry another wife.
11. Cut-throat interest rate being charged by the financial institutions is suicidal in the harsh economic environment like Nigeria. The interest rate is as high as 20-24%, besides the administrative charges. This has led to the death of so many businesses.
Sub-Topic 2: Suggested Solutions to Problems of Business Finance In Nigeria
1. The creation of a conducive policy regulatory environment.
2. Access to formal credit and complementary financial services on a sustainable basis.
3. Promoting access to requisite information and business development services to enhance the capacity of the sector.
4. Advertising, infrastructural bottlenecks (workspace, roads, sanitation, utilities etc.)
5. Promotions of effective research development systems for the growth and competitiveness of small and medium scale Enterprises (SMEs).
6. Improving Small and medium scale enterprise’s share of local/export markets.
7. Promoting the transportation of informed SMES to formal sector through sensitization/simplification of registration of registration procedures, to ensure full integration into the economy.
Business finance is core to the effective mobilization and harnessing of financial resources in any economy that is desirous to grow. We have leant in this topic the importance of different instruments for business financing. Wehave also x-rayed the common problem of business finance in Nigeria culminating in the high mortality rate of these businesses.
In conclusion we suggest way out of these problems and the need for government to address the issue squarely if the vision 2020 is to be realized.
SUMMARY
(1.) Shares are the interest an investor has in a business; shares are divided into
- Ordinary shares
- Preferred ordinary shares
- Deferred ordinary shares
- Non-voting shares
(2.) Finance is a very important ingredient in a business; there is the need to know how funds are made available for business purposes.
(3.) Sources of fund are classified into three:
- Shorter term
- Medium term source
- Long term source.
WEEKEND ASSIGNMENT
(1.) What is a share? B. Explain the different types of shares
(2.) List and explain the different ways businessesare financed in Nigeria.
(3.) What are the problems facing business financing in Nigeria. B. Give some solutions to the problems.
(4.) What do you understand by business finance?
(5.) What are the sources of finance available to small/medium scale business?
(6.) Mention problems of business finance in Nigeria?
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited
Content
1. Problems of business finance in Nigeria
2. Suggested solutions to problems of business finance
in Nigeria
Sub-Topic 2: Problems of Business Finance In Nigeria
Most of the problems encountered by average business in Nigeria are finance centered and this has nosedived or spiraled into other problems as highlighted below:
1. Lack of Funding and Financial Service
Paucity of fund and lack of concerted effort on the part of government to take decisive action to move businesses forward has been one of the militating problems confronting business in Nigeria.
Financial institutions that are supposed to support businesses are not forth coming; they prefer to invest in businesses that are very short-termed. The result is that these businesses are limited in capacity-building; while most of them lay their staff off and relocate to other better business-friendly environment.
2. Poor state of Physical Infrastructure
In spite of limited finance or fund, the average business in Nigeria has scramble for theavailable inadequate infrastructure like water, telecommunication and the transport system.
3. Non-access to medium and long term credit facilities, poor financial intermediation and lack of venture capital.
4. Poor market information and lack of market access.
5. Harsh business operating environment resulting in high cost of doing business and unfair competition from imported goods.
6. High mortality rate of small scale and medium scale business.
7. Weak sectional linkages resulting in lack of synergy liability.
8. Inadequate government support.
9. Lack of data for effective planning.
10. Diversion of fund for unproductive use by business men. Sometimes when this fund is made available the businessmen often divert the fund into other unproductive use. We have had instances when people take bank loans only to celebrate their birthday and sometimes to marry another wife.
11. Cut-throat interest rate being charged by the financial institutions is suicidal in the harsh economic environment like Nigeria. The interest rate is as high as 20-24%, besides the administrative charges. This has led to the death of so many businesses.
Sub-Topic 2: Suggested Solutions to Problems of Business Finance In Nigeria
1. The creation of a conducive policy regulatory environment.
2. Access to formal credit and complementary financial services on a sustainable basis.
3. Promoting access to requisite information and business development services to enhance the capacity of the sector.
4. Advertising, infrastructural bottlenecks (workspace, roads, sanitation, utilities etc.)
5. Promotions of effective research development systems for the growth and competitiveness of small and medium scale Enterprises (SMEs).
6. Improving Small and medium scale enterprise’s share of local/export markets.
7. Promoting the transportation of informed SMES to formal sector through sensitization/simplification of registration of registration procedures, to ensure full integration into the economy.
Business finance is core to the effective mobilization and harnessing of financial resources in any economy that is desirous to grow. We have leant in this topic the importance of different instruments for business financing. Wehave also x-rayed the common problem of business finance in Nigeria culminating in the high mortality rate of these businesses.
In conclusion we suggest way out of these problems and the need for government to address the issue squarely if the vision 2020 is to be realized.
SUMMARY
(1.) Shares are the interest an investor has in a business; shares are divided into
- Ordinary shares
- Preferred ordinary shares
- Deferred ordinary shares
- Non-voting shares
(2.) Finance is a very important ingredient in a business; there is the need to know how funds are made available for business purposes.
(3.) Sources of fund are classified into three:
- Shorter term
- Medium term source
- Long term source.
WEEKEND ASSIGNMENT
(1.) What is a share? B. Explain the different types of shares
(2.) List and explain the different ways businessesare financed in Nigeria.
(3.) What are the problems facing business financing in Nigeria. B. Give some solutions to the problems.
(4.) What do you understand by business finance?
(5.) What are the sources of finance available to small/medium scale business?
(6.) Mention problems of business finance in Nigeria?
REFERENCE TEXTS
(1) Fundamentals of Economics for senior secondary schools, Book1 by R.A.I. Anyanwuocha; Africana
(2) Comprehensive Economics for senior secondary schools, Book1, 2 & 3 by J. U. Anyaele; A. Johnson Publishers Limited
