Nigeria THE ROLE OF GOVERNMENT
Mechanized farm in northern Nigeria Young farmers making
vegetable beds at Esa-Oke agricultural settlement
Courtesy Embassy of Nigeria, Washington
Young farmers making vegetable beds at Esa-Oke agricultural settlement
Courtesy Embassy of Nigeria, Washington
Some of Nigeria's political leaders have advocated
African
socialism, an ideology that does not necessarily coincide
with
the Western socialist concept of the ownership of most
capital
and land by the state. Instead, the African variety
usually has
included the following: a substantial level of state
ownership in
modern industry, transportation, and commerce; a penchant
for
public control of resource allocation in key sectors; a
priority
on production for domestic consumption; and an emphasis on
the
rapid Africanization of high-level jobs. Despite the
socialist
rhetoric of some politicians, in practice Nigeria worked
toward a
mixed economy, with the directly productive sector
dominated by
private enterprise, the state investing in infrastructure
as a
foundation for private activity, and government providing
programs and policies to stimulate private (especially
indigenous) enterprise.
None of the major Nigerian political parties
controlling
national or regional governments from 1951 to 1966 (or
1979 to
1983) was a socialist party or a party strongly committed
to
egalitarianism. Even the Action Group, led during the
first
republic by the ostensibly anticapitalist Chief Obafemi
Awolowo,
had as its foundation the rising new class of
professionals,
businesspeople, and traders.
After Nigeria's 1967-70 civil war, petroleum output and
prices increased rapidly. The government's control of the
extraction, refining, and distribution of oil meant that,
the
state became the dominant source of capital. By the
mid-1970s,
petroleum accounted for about three-fourths of total
federal
revenue. To the most vigorous, resourceful, and
well-connected
venture capitalists (often politicians, bureaucrats, army
officers, and their clients), productive economic activity
lost
appeal. Manipulating government spending became the means
to
fortune. Because of the rapid growth of the state
bureaucracy and
the establishment of numerous federally funded
parastatals, the
size of the government sector relative to the rest of the
national economy hit a peak in the late 1970s.
In an effort that culminated in the 1970s, the Nigerian
government gradually expanded its controls over the
private
sector, levying differential taxes and subsidies,
increasing
industrial prices relative to farm prices, favoring
investment in
key sectors, providing tariff and tax incentives to vital
sectors, protecting favored industrial establishments from
foreign competition, awarding import licenses to selected
firms
and industries, and providing foreign exchange to priority
enterprises at below-market exchange rates. While the
ostensible
reasons for this policy of favoritism were to transfer
resources
to modern industry, expand high-priority businesses and
sectors,
encourage profitable enterprises, and discourage
unprofitable
ones, in practice the government often favored urban areas
by
promoting production that used socially expensive inputs
of
capital, foreign exchange, and high technology. Market
intervention helped political and bureaucratic leaders
protect
their positions, expand their power, and implement their
policies. Project- or enterprise-based policies (unlike
reliance
on the market) allowed benefits to be apportioned
selectively,
for maximum political advantage. Government made it in the
private interest of numerous individuals to cooperate in
programs
that were harmful to the interests of producers as a
whole.
However, market-clearing prices (for farm commodities or
foreign
exchange), whose benefits were distributed
indiscriminately,
inspired little or no political support among farmers and
businesspeople.
Beginning in 1979, the policy prescription of the World
Bank
(and IMF) was for African countries to refrain from
interfering
in foreign exchange and interest rates, wages, and farm
prices;
to privatize state-owned enterprises (especially
agro-processing,
farm input distribution, insurance, and retail and
wholesale
trade); to relax restrictions on foreign capital; and to
encourage indigenous business ventures. By the early
1980s,
Nigeria faced substantial international payments deficits
in the
midst of declining export prices and rising import prices,
rising
external debt payments, and negative economic growth. The
government consequently undertook an its own SAP that was
patterned along World Bank guidelines in 1986, with World
Bank
conditions including devaluation of the naira (for value
of the
naira--see Glossary),
reductions in real government
spending,
abolition of official agricultural marketing boards, the
sale of
public enterprises, liberalized trade, and reduced quotas
and
licenses
(see Planning
, this ch.).
Data as of June 1991
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