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By Ajay Kannan
The Federal Republic of Nigeria
Political and Economic Change
Causes for Nigeria’s present day political and economic situation can be found in its history
Three time periods in Nigerian history Pre-colonial era (800 CE – 1860) Colonial era (1860 – 1960) Modern era (1960 – present)
Overview
Sokoto Caliphate (1808-1900) Muslim state in north
Slave trade started in south – 16th century to early 20th century Africans fought wars to
obtain slaves to sell Driven by demand for
western goods Outlawed in 1936
Source: activehistory.ca
Pre-colonial Era
Britain imposed indirect rule – trained natives to fill the European-style government the British installed
British influence was strongest in the south (Islamic hierarchies were already established in the north)
Introduction of western-style schools Christian missionaries set up many schools Created a relatively literate population, but
reinforced cleavages – rich & poor, south & north
Colonial Era
Mercantilism Nigeria exported raw materials to Britain Imported finished goods from Britain Contributed to modern day troubles in industry and service
sectors Nigerians wanted independence
They saw other African countries preparing for independence
English values, such as freedom and justice, were taught in their Western education
Peaceful, slow transition to autonomous rule, while the British prepared Nigeria for independence on October 1st 1960
Colonial Era
1960-1966: 1st Republic – parliamentary system 1966-1998: Instability
Military dictatorships prevalent, with many coups and assassinations
2nd and 3rd republics unsuccessful 1999 – present: Presidential Democracy
1999, 2003, and 2007 elections are marked by violence and fraud, but it has satisfied the 3 election rule, suggesting that Nigeria will maintain its democratic constitution
People’s Democratic Party (right-wing) has won all three elections
Modern Era
1967-1970 – Biafran war (south wanted to secede)
2000 – rebellions against Sharia law
Oil profits are split between federal and state governments leads to poorer conditions in the north
Source: http://nigeriansabroadlive.com/wp-content/uploads/2010/12/NigeriaMap_resources.jpg
Source: http://www.movements.org
Rentier state: a state that derives much of its revenue from its resources
Largest exports: Oil & natural gas make up ~90% of export profits and ~80% of government revenue
Largest imports: machinery Agriculture 31.9%, industry 32.9%, services
35.2% 32th largest GDP, but 182th GDP per capita Africans are drawn to Nigeria for economic
opportunity, but reforms must be made to improve quality of life
Nigeria’s Economy Today
Inexperienced military leaders failed to industrialize
Corruption and Inefficiency Agriculture has suffered under incoherent
government policy There is unused farmland and untapped mineral
sources Nigeria does not use oil profits to invest
infrastructure or education enough 2003-2007 – NEEDS and SEEDS
(National/State Economic Empowerment Development Strategy) attempted to address these problems with mixed success Deregulation, privatization, transparency, and
accountability Provide jobs by improving infrastructure
Economic Problems
1956 – oil discovered 1970 – Nigeria joined OPEC (Organization of
the Petroleum Exporting Countries) 1970 – oil began to be drilled 1970s – oil production increased, especially as
multinational corporations became interested in profits in Nigeria
1971 – Nigerian National Oil Corporation founded, renamed Nigerian National Petroleum Corporation in 1977, state-owned
1980 – global recession, huge drop in oil profits
2000s – GDP increased because oil prices rose
Large multinational corporations have the capital to find, claim, and drill oil reserves Royal/Dutch Shell, ChevronTexaco, Exxon
Mobile, Totalfia Elf, Agip and PanOcean Oil get 43% of the profits
Of the profits Nigeria gains, 80% profit goes to the government, 16% goes to operational costs, and 4% goes to investors
Highly susceptible to corruption, crashes in global recessions, mismanagement
Decline in the competitiveness of industry and service sectors “Dutch disease” – oil increases the demand for the Nigerian
naira, since companies must pay Nigerians in naira for their oil. The increased demand results in a higher value for their currency. Thus, the cost of goods made in Nigeria increases compared to goods made in other countries, and people stop buying Nigerian goods.
Debt troubles – lenders charge high interest rates if the industry is not doing well
Nigeria, like many developing states, gets loans from international organizations (IMF, World Bank)
2006 – Nigeria became the first African country to pay off debt to the Paris Club Nigeria worked out a plan to officially pay off debt to
Paris Club (paid $12.4 billion out of the $30 billion borrowed)
$1 billion dollars more to use in federal budgets Nigeria still owes money to international
organizations (IMF, World Bank)
Most industries nationalized in 1970s and early 1980s
1992 – Privatization of 73 medium-small government owned companies (i.e. cement, insurance, banking)
Late 1990s – 2nd and 3rd largest industries privatized National Electric Power Authority (NEPA) and Nigerian
Telecommunications (NITEL) were privatized in accordance with IMF and World Bank advising to grow its economy
Finance and banking industries are fairly developed Textile production – growing slowly with investment
from other countries
Economy is as strong as it has ever been Relatively low inflation (10 to 12%), GDP
growth ~6-9% annually – projected to become a top 30 economy
Since early 2000s, the government has increasingly focused on market-oriented reforms urged by international organizations Modernizing the banking system, curbing
inflation, providing jobs
Almond, Gabriel, et al. Comparative Politics Today: A World View. 9th ed. 1911. New York: Pearson Longman, 2002. Print.
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United States. Central Intelligence Agency. “Nigeria.” The World Factbook. N.p., 24 Jan. 2011. Web. 17 Feb. 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html>.
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