Nigeria Economic Development
Source: The Library of Congress Country Studies
After the civil war, the FMG moved to resurrect the six-year development plan inaugurated in 1962. The First National Development Plan charted Nigeria's transition from an essentially agricultural economy to a mixed economy based on agricultural expansion and limited industrial growth. Government was heavily involved in the economy because locally generated private investment was unable to generate sufficient capital for development. New development plans were instituted in 1970 and 1975, but the goals set in all three plans proved unrealistic (see Planning , ch. 3).
By the late 1960s, oil had replaced cocoa, peanuts, and palm products as the country's biggest foreign exchange earner. In 1971 Nigeria--by then the world's seventh-largest petroleum producer--became a member of the Organization of the Petroleum Exporting Countries (OPEC). The dramatic rise in world oil prices in 1974 caused a sudden flood of wealth that can be described as "dynamic chaos." Much of the revenue was intended for investment to diversify the economy, but it also spurred inflation and, coming in the midst of widespread unemployment, underscored inequities in distribution. In 1975 production fell sharply as a result of the sudden decrease in world demand, and prices moved downward until late in the year when OPEC intervened to raise prices. Nigeria fully supported OPEC policies.
In 1972 the government issued an indigenization decree, the first of a number of Nigerian Enterprises Promotion decrees, that barred aliens from investing in specified enterprises and reserved participation in certain trades to Nigerians. At the time, about 70 percent of commercial firms operating in Nigeria were foreign-owned. In 1975 the federal government bought 60 percent of the equity in the marketing operations of the major oil companies in Nigeria, but full nationalization was rejected as a means of furthering its program of indigenization.
Unemployment constituted an increasingly serious problem. Large numbers of farm workers, who had gone to urban areas in search of higher wages, remained in the cities even if they failed to find jobs, while school graduates and dropouts flooded the labor market at a rate of 600,000 a year in the mid-1970s. Unemployment reached its highest levels in the crowded Igbo areas in the east, where the economy still was recovering from the effects of the war. Skilled workers were reluctant to leave the east in search of work, although eventually the shortage of skilled workers in other parts of the country began to have its effect in overcoming Igbo fears. The dangers involved in discharging large numbers of soldiers who had no job prospects made demobilization of the costly military establishment undesirable. Substantial increases in public-sector employment promised to absorb some of the soldiers, but they lacked training. These economic problems assumed an imposing political dimension. To some extent, they reflected a pattern in the world economic situation, but the popular imagination blamed corruption and mismanagement and held the Gowon regime responsible.
The regime also had to deal with a severe drought that struck the northern states between 1972 and 1974. The drought was the most serious since that of 1913-14. The drought and resulting famine affected the Sahel countries to the west, north, and east far more than Nigeria, but considerable numbers of refugees poured into Nigeria from Niger. Famine conditions also prevailed in some parts of the north of Nigeria. In the long run, however, Nigerian agriculture benefited from the rise in prices that resulted from crop failures in other parts of the Sahel. In the short run, the drought influenced policy decisions about the necessity of promoting irrigation schemes and reforestation.
Data as of June 1991
NOTE: The information regarding Nigeria on this page is re-published from The Library of Congress Country Studies. No claims are made regarding the accuracy of Nigeria Economic Development information contained here. All suggestions for corrections of any errors about Nigeria Economic Development should be addressed to the Library of Congress.