Examples of Economic Institutions In Nigeria

JSS 3 Social Studies Second Term 

WEEK 7

Date__________

TOPIC: ECONOMIC INSTITUTION

CONTENT:

Meaning and examples of economic institution.

The role of economic institution in Nigeria’s economy.

SUB-TOPIC 1:MEANING AND EXAMPLES OF ECONOMIC INSTITUTIONS

DEFINITION OF ECONOMIC INSTITUTIONS

Economic institutions are agencies responsible for the organization of a society’s resources and services.

Examples of economic institutions:

1. BANKS
2. THE NIGERIAN STOCK EXCHANGE ( NSE)
3. SECURITIES AND EXCHANGE COMMISSION ( SEC)
4. INSURANCE COMPANIES E.G LIFE INSURANCE,HEALTH INSURANCE.
5. NIGERIAN DEPOSIT INSURANCE COORPORATION ( NDIC)
6. MARKETING INSTITUTIONS ETC

BANKS:

Banks are economic institutions that receive, keep and lend money at interest. They are the pivot around which a nations economy revolves.

Types of banks:

The types of banks operated in Nigeria to meet both private and corporate organizations’ needs include:

1. Central bank of Nigeria- a non-profit organization for government transactions
2. Commercial banks
3. Federal savings bank
4. Agricultural credit banks
5. Merchant bank- for merchants and large scale traders
6. Industrial development banks
7. Mortgage banks for small and medium scale industries.

NIGERIAN STOCK EXCHANGE

It is an organized and essential part of the capital market where investors buy and sell stocks, shares, debentures etc.

The NSE was established through the act of parliament in 1960 and was then called Lagos Stock Exchange until 1977. It is situated in Lagos with its branches in Port Harcourt and Abuja, Ibadan, Kaduna, Kano and Onitsha.

INSURANCE COMPANIES

Insurance is a system of providing compensation for the effect of losses. It operates on the principle of risk pooling.

A provision made by an individual or establishment to cushion the effect of future losses. Life, automobile, health, and property can be insured and the companies involved in insurance include: Goldlink insurance company, Africa alliance insurance companies, Lion of Africa insurance, reinsurance corporation of Nigeria, industrial and general insurance (IGI), NICON insurance corporation etc.

TYPES OF INSURANCE

1. Agricultural insurance
2. Fire insurance
3. Marine insurance
4. Whole life insurance
5. Fidelity guarantee
6. Cash in transit insurance
7. Motor vehicle insurance
8. Health insurance
9. Liability insurance
10. Group insurance
11. Home insurance
12. Credit insurance etc

SECURITIES AND EXCHANGE COMMISSION (SEC)

This is an economic institution which oversees, regulates, monitors and controls the activities on the capital market. It was established in 1979 to replace the Capital Issue Commission formed in 1973 by the federal government. Its scope covers all public limited liability companies or private limited liability companies.

NIGERIAN DEPOSIT INSURANCE CORPORATION (NDIC)

This is an economic institution established to protect bank deposit in order to enhance healthy banking system in Nigeria.

It is empowered to regulate, supervise and advice the insured banks. It also operates on a mechanism that all commercial banks, merchant banks and other financial institution receiving deposits must insure their deposits with the NDIC.it conducts periodic examination of bank records and banks’ activities and protects the interests of depositors.

We also have marketing institution, farming institution , manufacturing institutions etc

Evaluation:

1. Mention 5 types of insurance
2. Define the term insurance
3. Mention any 6 examples of economic institution
4. Enumerate 5 types of banks
5. What is the full meaning of these acronyms
6. NDIC
7. NSE
8. SEC

SUB TOPIC 2:

ROLES OF ECONOMIC INSTITUTIONS IN NIGERIA’S

ECONOMY

Role Of Banks

1. Banks issue cheques – this helps to enhance trade and travel
2. Lending money to the government, firms and private individuals.
3. Safe keeping of valuables
4. Banks play the role of payment agents.
5. The central bank controls the flow of cash in circulation
6. Banks, especially commercial banks act as executor of will
7. Banks buy and sell shares and stock to their customers

Roles of insurance companies

Insurance is very vital in the economy of Nigeria because of the following roles it plays:

1. It provides an avenue for businesses to keep going, even after liabilities are incurred.
2. It improves productivity of workers through group insurance policy, where workers are fully assured of a secured future.
3. It encourages international trade
4. It makes money/ fund available for investment, which invariable helps in developing the country’s economy.
5. Insurance encourages savings
6. Life assurance certificate can be used as collaterals for bank loans.

Roles of Nigerian Stock Exchange

1. The NSEhelps companies, government and investors to mobilize funds for projects execution.
2. It serves as a market where people can invest their money in of companies’ shares i.e. financial market investment.
3. It acts to promote the transfer of shares.
4. It provides the platform for government to mobilize funds through bond selling or gilt – edge securities in the stock market.
5. It assists investors to buy or sell old securities.
6. It helps individuals to transfer securities easily
7. Provides job opportunities for stock brokers, computer operators etc
8. It monitors the activities of quoted companies
9. Assist investors in the identification of thriving and viable companies
10. Aids selling and buying of stock, shares and debentures

ROLES OF SECURITIES AND EXCHANGE COMMISSION (SEC)

1. Helps to determine the allotment of securities.
2. It functions to regulate time, prices and quantity of securities issued.
3. Promotion of capital market development.
4. It monitors the transactions on the stock exchange in order to ensure fair play.

e) Registration of securities and participants.

GENERAL ROLES OF ECONOMIC INSTITUTION

1. They assist in determining how political decisions are made.
2. They provide the platform for the exchange of goods and services.
3. They ensure the continuous circulating and security of money.
4. They dictate the level of a country’s economic development
5. Provision of employment opportunities
6. They play the role of professional advisers.
7. Enhancement of industrial development.
8. They encourage industrial growth through provision of working capital
9. Economic institutions earn the country foreign exchange
10. They promote cultural exchange.
11. They encourage savings needed to boost the level of investment.
12. They provide the needed securities for commercial activities through insurance services.

Weekend Assignment:

Objective Test:

1. All but one of these are examples of economic institutions
2. Banks (b) insurance companies (c) World Health Organization (d) securities and exchange commission
3. An organized and essential part of the capital market where share are sold and bought is known as (a) corporal market (b) the Nigerian Stock Exchange market (c) central bank (d) monopolistic market.
4. The role of insurance companies include all but one of these
5. Wasteful and uncourteous spending of national wealth (b) encouragement of international trade (c) encouragement of saving (d) improved workers productivity.
6. The full meaning of NDIC is
7. National Directorate of Immediate Cash
8. Nigeria Drug Improvement Commission
9. Nigeria’s Deposit In Canada
10. Nigerian Deposit Insurance Corporation
11. The economic institution that helps to determine the allotment of securities and promote capital market development is the _________
12. NDIC (b) SEC (c) NNPC (d) Insurance companies

Essay Test:

1. Explain the role of marketing institution in Nigeria’ economy.
2. In five(5) sentences, mention the import of our lesson on ‘economic institution in Nigeria’(why do think we need to know about economic institution in Nigeria?).
3. Look up the meaning of these terms from your dictionary and write out the meanings:Debenture, Investor, Shareholder, Jobber and Broker