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Nigeria Economic Development
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
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