SCORECARD ON 100 YEARS OF NIGERIAN ECONOMY A critical assessment of Nigeria’s economic adventures over the past 100 years portrays a picture of a country at the crossroads, meandering through the journey towards a truly developed nation without the required political compass to guide itself to the cherished destination. Quite interestingly, the pre-colonial economic history of Nigeria indicated that even before theA critical assessment of Nigeria’s economic adventures over the past 100 years portrays a picture of a country at the crossroads, meandering through the journey towards a truly developed nation without the required political compass to guide itself to the cherished destination. Quite interestingly, the pre- colonial economic history of Nigeria indicated that even before the 1914 amalgamation which unified the Southern and Northern Protectorates, most Nigerian communities and traditional political systems had established a very strong economic base, largely dominated by agriculture, mining and other ancillary productive activities. In that era, there was a bond of shared communal values and moral ethos which served as the frameworks that guided both the leaders and the people such that governance was not only transparent and inclusive but also engendered productive activities in the various communities. Then came colonialism in Nigeria, as with other colonies as an offshoot of the post slave trade economic war between Britain, France, Germany and other colonial powers, which culminated in the scramble for the economic resources of the colonised territories and the hitherto peaceful, secured and futuristic hinterland kingdoms and settlements . As had been well documented by many historians, the driving force for the struggles by the colonial powers, especially Britain, was the need to open up markets for their manufactured goods, expanding commerce in palm oil and securing and controlling of the ivory trade to drive growth in the home country and overall development of the British Empir. It is instructive to note that long before the amalgamation of Northern and Southern Protectorates, the British Government had by 1850 concentrated its trading interests in Lagos and the River Niger Delta areas and by 1861 it fully took over Lagos which became a crown colony. Following the British Colonial Office’s request in 1940s that the colonies should prepare plans which will assist it in disbursing the development and welfare funds, Nigeria initiated a 10-year Plan of Development and Welfare, from 1945 to 1955, which was later broken down into two phases, to guide the national development agenda. During the 46 years of colonial administration, Britain took some steps to create some financial and other export trade- supporting institutions like banks at the sub- regional level as well as engage local political elite on monetary policies and legal frameworks that served as take off grounds for today’s institutions like the Central Bank, NITEL, Nigerian Railway Corporation and other long-term infrastructure asset needs. Following agitations by Nigerian legislators in 1952, there was a call for the establishment of a central bank to facilitate economic development, 50 years after, the first 1892 Nigeria’s first bank, the African Banking Corporation, was established. In 1957 the Colonial Office sponsored another study that led to the establishment of a central bank and the introduction of a Nigerian currency. Available statistics showed that 72 per cent of the total national economic output came from agriculture in 1950, compared with 1.1 per cent from mining and crude oil. By 1960, agriculture still retained its leading position as the primary source of revenue, accounting for 66 per cent of the Gross Domestic Product (GDP), even as its contributions to export trade stood at over 70 per cent. During the period, 95 per cent of the nation’s food needs were locally produced. Even when it is generally agreed that the over four decades of British administration in Nigeria did not create opportunities for political engagement of the indigenous elite to participate in the running of the affairs of their country, Britain was able to develop a culture of policy-based economic management templates for national resources in line with the global best practices then. Despite the general perception of the of most Nigerians and other analysts on the exploitative thrusts of the colonial administration’s economic policies, an incontrovertible feature of the pre-independence economic history of Nigeria was that in the pursuit of their economic interests, the colonialists, willy- nilly, provided funds for rail, road and ports infrastructure development. Although these facilities were very crucial to accessing hinterland commodities and facilitating shipment from Lagos to Britain, the foundation laid by the colonial masters for driving agricultural export trade eventually became an enduring legacy in national transport system. Not until recently when efforts are being made to rehabilitate the rail networks, the old system was the hub for movement of commodities along the North-South-East geo-political zones. The discovery and massive exploration of crude oil, however, changed the face of Nigeria’s economic planning and development history in the early 60s. up till now, with crude oil earnings which was mere 2.7 per cent in 1960 of exports value rising to 73.7 per cent in 1971, the year Nigeria joined the Organization of Petroleum Exporting Countries (OPEC). As most researchers, including Dr Ishmael Ogboru, in his work published in 2006 and titled ‘Readings in Economic Development & Planning: A Monograph on Nigeria’ have noted, in spite of the positive developments, Nigeria has since 1979 been facing a balance of payment crisis with the period 1979 – 83, 84-98 and 99-2003 representing the period of the country’s greatest economic mismanagement. A major feature of Nigeria’s economy in the 1980s, as was the case in the preceding decade, was its over-dependence on crude oil, which accounted for 87 percent of export receipts and 77 percent of the federal government’s current revenue in 1988. Beyond the revenues, were also some economic policy measures adopted by successive administrations as a response to emerging economic development issues, to facilitate sustainable growth of the economy. For instance, in 1972, the government promulgated the Indigenisation Decree that barred forreign from investing in specified enterprises and also certain trades. Before then, about 70 per cent of commercial companies operating in Nigeria were owned by foreigners. Several other Enterprises Promotion Decrees were issued even as measures were undertaken to get the government involved in key businesses that have far-reaching implications for national development. One of this was buying of 60 per cent equity in the marketing of major oil companies in 1975. Similarly, the 20 years from 1980-2000 witnessed remarkable build up in Nigeria’s infrastructure capacity as well as massive investments in key sectors such as power telecommunication, health, education, aviation, in response to the growing needs of a rapidly growing population. The period also triggered some positive multiplier effects in financial, manufacturing, trade and many others, in a manner that suggested that the huge incomes earned from oil exports were not totally squandered. However, when the growth recorded in the years before the democratic regime in 1999 are analysed within the context of the pervasive abuses and critical distortions in the nation’s economy characterised by inflation, widespread unemployment, inequalities in wealth distribution, decline in per capita real GDP, rural- urban migration, fiscal mismanagement, and white elephant projects syndrome, amongst other under- development anomalies, the gains of the over 40 years of oil exports would pale into insignificance. With the massive looting of the nation’s treasury, policy inconsistency, over-bloated contract syndrome, abandonment of the non-oil sector, white elephant projects extravagance, unbridled consumption of imported goods, amongst other factors, Nigeria was denied the capacity to grow, thereby leaving millions of citizens malnourished and impoverished than they were in the colonial days. Indeed, GNP per capita per year decreased 4.8 percent from 1980 to 1987, which led in 1989 to Nigeria’s classification by the World Bank as a low- income country (based on 1987 data) for the first time since the annual World Development Report was instituted in 1978. In 1989 the World Bank also declared Nigeria poor enough to be eligible (along with countries such as Bangladesh, Ethiopia, Chad, and Mali) for concessional aid from an affiliate, the International Development Association (IDA). According to analysts, the unimpressive performances of the virile sectors like manufacturing, agriculture, housing, steel and mining all of which should have constituted the bedrock of national economic development is traceable to inefficient and lopsidedly structured budgets, fiscal ineptitude, poor planning and shoddy implementation of policies for the various sectors but more particularly, corruption, the biggest challenge constraining Nigeria’s transformation of her huge economic potentials into real growth. Painting a picture of what the nation’s economic scorecard looks like in the last 100 years, a seasoned financial consultant, Dr Boniface Chizea, said Nigerian economy remained largely work in progress. He described Nigeria as a country so endowed with natural and human resources, good climate, minimal risks of natural disasters and people and professionals that have recorded landmark achievements in many areas in global economic system that should make it a world beater, but still remained a parlous nation when measured in terms of many socio-economic performance indices. Chizea identified the problem of the mono cultural nature of the economy, poor quality leadership, bad implementation of otherwise viable programmes and the attendant negative implications for the nation’s currency exchange rate as amongst the major problems hampering Nigeria’s efforts to remain a leading economic player in the world’s rapidly changing economic system. He stated: “Nigerians have recorded landmark achievements in many areas particularly in technology and have been acknowledged and celebrated and therefore in spite of the deterioration being experienced in the educational sector, Nigeria abound in the quality and quantum of human resources to make the country a world beater. “There are no mineral resources that are not available in Nigeria; some of them even not found in many other countries. But regrettably the potentials of these mineral endowments are not fully tapped. There has been an unhealthy and undue concentration and focus on the petroleum sector which in itself is an enclave sector with little or no linkages with the rest of the economy; creating little value addition and jobs. “The problems of Nigeria are well known and it revolves around the issue of the mono cultural nature of the economy including lack of good leadership with vision. Attempts have been made to achieve the badly needed diversification of the national economy by broadening its base. The Structural Adjustment Programme of the mid 1980s was targeted at finding a solution to this malaise but unfortunately it was badly implemented and instead resulted in avoidable distortions which occasioned a massive and sudden depreciation in the value of the national currency”, Chizea lamented. Despite the challenges, the finance expert believes that hope must be kept a live with the transformation agenda of this government which, if is allowed to concentrate and implement, has the key to unlock the great potentials of the country. According to him, already Nigeria has been identified, based on some of its endowments not the least is its large population which automatically translates to large market, as one of the four countries, including Malaysia, Indonesia and Turkey which formed the acronym (MINT) to watch to overtake some long established economies within the next 30 years. In another classical expository analysis of the economy in the last 100 years, a renowned economist and university don, Prof Akpan Ekpo, noted that the Nigerian economy had been on a roller coaster as it metamorphosed through various phases of a typical business cycle – booms, bursts, decline and recovery – characteristic of a dependent capitalist economy. Ekpo, who is also the Director General West African Institute For Financial And Economic Management (WAIFEM) Central Bank of Nigeria Learning Centre, lamented that despite the agricultural commodity boom of the 1960s, the oil boom of the 1970s and 2000s as well as the financial boom of the 1990s, these potentially positive developments had no positive impact on the economy as none of the boom was linked to the real sector. The former Deputy Vice Chancellor of the University of Uyo, Cross River State, pointed out that the past century of Nigeria’s economic programmes had not really changed anything from what the colonial masters set as its template, that is, an import- dependent economy that thrives only by revenue earnings from primary produce exports. The WAIFEM boss said: “Since the colonial masters integrated the economy into the global capitalist system as exporters of raw materials and importer of finished goods and services, nothing has really changed. The leaders after independence have maintained the same status quo. “The management of the economy has been characterized by ad hoc, inconsistent and policy reversals. Consequently, in the last 100 years, performance of the economy has been marginal; unemployment, poverty and the lack of basic needs continue to rise. “The experience in the last 100 years has been the development of underdevelopment; the economy remains underdeveloped and backward in spite of years of conceptualizing, formulating and implementing various policies, strategies and programmes”, Prof Ekpo added. Despite the far-reaching flops in the nation’s economic adventures in the last century, the past few years of the immediate past and present administrations may not have been totally described as economically misguided. This is especially true of the present administration’s Transformation Agenda and its modest achievements in power, agricultural, infrastructure, health and financial services sectors of the economy. Available statistics in respect of the power, road and rail networks and agricultural sector reforms showed that substantial mileages had been covered in the last few years in terms of infrastructure capacity re- engineering, FDI inflows, institutional reforms, productivity and savings and more importantly macroeconomic stability in the face of insecurity and other challenges. For instance, under the ATA alone, the implementation of the rice, cotton, sorghum, cassava value chains have enabled the country to reduce import bills on food items and by implication, helped to conserve the foreign exchange that would have been spent on importing the products. The latest official figures on the nation’s real GDP growth rate, when measured on aggregate basis grew by 6.81 percent in the third quarter of 2013, representing 0.63 per cent higher than the growth rate in the preceding quarter. The second quarter GDP growth rate recorded 6.18 per cent while the Q3, 2012 rate stood at 6.48 per cent. The fact of the strong outlook of the economy was affirmed recently by the Lagos Chamber of Commerce and Industry (LCCI) in its 2014 Economic and Business Outlook released a forth-night ago that Nigerian economy in the current year would be characterized largely by macroeconomic and investment climate conditions that prevailed in 2013, with the possibility that it may emerge as the largest on the African continent and one of the top 30th in the world after the GDP rebasing which is expected in 2014. As promising as the future prospect of the economy looks, experts have identified policy sustainability, people- oriented programmes, fiscal discipline and political will to address corruption as key to leveraging on the gains of the Transformation Agenda and other initiatives aimed at making Nigeria one of the 20 most developed economies globally by the year 2020.
Posted on: Thu, 06 Mar 2014 07:27:08 +0000
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