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YILDIRIM BEYAZIT UNIVERSITY

GRADUATE SCHOOL of SOCIAL SCIENCES

SOP 651

ECONOMIC DEVELOPMENT

GREATEST OBSTACLES OF NIGERIA IN TERMS OF GROWTH AND DEVELOPMENT

PreparedBy:

Mansur Boydaş

Submitted To:

Prof. Dr. Dilek Demirbaş

November 2012

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GREATEST OBSTACLES OF NIGERIA IN TERMS OF GROWTH AND DEVELOPMENT

Facts of Nigeria: Political and Administrative Structure

Federal Republic of Nigeria has petroleum-based economy and a West African country with a

surface area of 923 773 km ². On the other hand, Nigeria, Africa's most populous with a

population of 155.2 million, and the second largest economy in sub-Saharan Africa after

South Africa. About 55% of the population is Muslim predominantly settled in northern

states, and 45% Christian live in predominantly southern states. With more than 250 ethnic

groups, Nigeria is a country with one of the world's largest ethnic group. Nigeria is a federal

republic consisting of 36 states and one Federal Capital Territory “Abuja”. Nigeria gained

independence from Britain on October 1, 1960. Between the years 1966-1999, except for a

short interim period of governments, military ruled the country and after the general elections

held in 1999, democracy started in the country. Nigeria is governed by a presidential system.

Foreign Trade of Nigeria

Contrary to many other African countries, Nigeria is one of the few important countries in the

African continent with a trade surplus and as the size of both exports and imports. Especially

in the last 10 years, the country has had a significant trade surplus. This is mainly related to

the oil exports and rising oil prices. According to the CIA World Fact Book, the exports of

Nigeria in 2011 are about $103.1 billion dollars and will keep increasing and the imports are

$69.45 billion dollars.

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Table1: Foreign Trade Viewed by Year

Source: The Economist Intelligence Unit Nigeria Country Report, Mart 2011T.C. Ministry of Economics: Nijerya Bilgi Notu

Petroleum is accounting for over 90% of Nigeria’s export earnings. While the government

aims to increase export items, this issue has not been successful. Liquefied natural gas (LNG)

is the second largest export item. The export share of liquefied natural gas was 5.5% in 2010.

Besides petroleum and natural gas, the animal skins and leather, cocoa and cocoa products, oil

seeds, natural rubber and other products which are important in exports of Nigeria. The

reasons for lower non-oil exports of products are the intense trafficking and overvalue of

Naira, the currency of Nigeria. Nigeria's most important export partner is the United States

and other important partners are as follows; India, Brazil, Netherlands, France, Italy and

Spain. The share of Turkey in 2010 exports of Nigeria is only 0.5% and Turkey takes 27 th

place in Nigerian export market (Akova, 2012). Nigeria's important import goods are

passenger cars, motor vehicles for the transport of goods, electrical transformers, static

converters, public transport vehicles, parts and components for land vehicles, plumber goods,

wheat, rubber goods, frozen fish and iron and steel-wire electrical devices for telephones

(Akova, 2012). The United States is again the most important partner of Nigeria in imports.

The share of USA in 2010 imports is 17.9%. Chine is the second after USA with a share of

16.6%. The share of Turkey in 2010 imports of Nigeria is only 0.6% and Turkey takes 28 th

place.

Growth And Development Obstacles

Development is critical and essential for the nourishment and growth of any nation. A state is

developed when is able to afford sufficient life for her people. It is tragic that Nigeria in the

last fifty years has been struggling with the troubles of development despite her vast human,

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material and natural resources. With an active leadership, economic success would have been

achieved already. Igbuzor states that it is ironic that Nigeria is the sixth largest exporter of oil

and at the same time host the third largest number of poor people after China and India. While

there has been sound economic growth within the context of GDP in the last few years, there

are uncertainties whether the advantages are equally circulated particularly to the poor and

excluded through development. There is growth with no development alongside. Nigeria is

among the twenty states in the world where the gap between the rich and the poor is widest.

Although Nigeria has had sequence of development plans started from the colonial times, all

attempts to create momentous development proved useless. The greatest obstacles in terms of

growth and development of Nigeria shown in the figure;

Growth And Development Obstacles Of Nigeria

NIGERIA

Lack of Good Governance

Human Security

Human Capital Development

Unjust Political, Social, Economical

Structures

High Illiteracy Rate

Unskilled Workers

Low Productivity Survival, Basic Needs,

Quality of Life

Unemployment

Conflicts Among Ethnic Groups

Over Population

Corruption

Infrastructure

Poverty

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Lack Of Good Governance

There exists a strong relationship between development and good governance. In spite of

numerous development plans, there has not been a significant increase in growth and

development. So, what went wrong? Were the plans bad in their context or wrongly

anticipated? Many aspects have united together to bind growth and development of Nigeria.

The new economic plan is called 2020 vision and to achieve expected outcomes the economy

was expected to grow at 14% annually, but currently economy is growing at 7%. The low

GDP growth is mainly due to ineffective distribution and broke administration of the

country’s human and natural resources. According to the 1999 constitution of Nigeria, the

local governments mainly depend on the state government within the context of freedom and

financial strength which entails breakages on economic growth. In the majority of the cases,

there was no executive capacity responsible for the formulation and implementation of

development plans. Some of the plans failed because of no consultation of the general public.

Development plans are supposed to involve even a single human being in the state. Even, the

Local Government officials who are close to the people were not consulted. Mimiko asserts in

her article that planning is not an edifice where technocrats alone operate (as cited in

Oluwatoyin and Lawal, 2011). Development becomes a fantasy where there is lack of good

governance. This shows that the leaders have no sense of dedication to development. Another

obstacle of development in Nigeria which is related to governance is high level of corruption.

Corruption is a key problem which directs resources away from growth and development.

Nigeria is depicted to be country where the robbery of state fund is flagrantly institutionalized

(Ofeimun, 1993). The state of Nigeria could be very prosperous whereas it has wasted oil and

mineral wealth and generated unfair income distribution. The state is corrupt and governed by

corrupt leaders who have made the state a mechanism of capital accretion, despite using it to

the concern of the people. Transparency International has rated Nigeria as the second most

corrupt state in the world in the 2002 report. Lack of good governance in a way corrupt

government triggers unjust political, social and economic structures which threatens human

security, quality of life and have negative effects on infrastructure. Even the base of conflicts

among the ethnic groups is related to economics, therefore the main problem here is that the

state fund leakages should be cut and redirected to the policies within the context of citizens’

interest to achieve sound growth and development. As a result of unjust political, social and

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economic structures, human security comes into question. Breakdown process of social

groups, economic systems and political structures threatens human security at all levels.

Conflicts among groups have made Nigeria unsecured since independence in 1960. The

human security is jeopardized by hunger, poverty, inequality, injustice, dependence,

ignorance, corruption and crime. As a result of poverty, consumption is low in the general

public which directly effects economy. The connotation of poverty on economic development

of Nigeria is visible in the lack of sufficient infrastructure. The supply of electricity is

irregular and for few hours in a day. This entailed the condition in which the country as a

whole lacks access to adequate food supply and access to services like health and education. It

is crucial to hub on human security in order to hub on a comprehensive development

schedule. Human security and human development are associated. Human development

would only be achieved by the existence of human security and without human development

human security is not possible reach. So these two are very much interrelated. The security is

essential as the action plans of entire development will position on the foundations of security.

Economic security of people is the most significant of them. No economic assets, no progress.

Economic security is based on stable, regular and satisfactory income, profitable employment

for all and the optimum level of the population of the state. Akpobasah states that

“Income distribution in the country is also highly skewed such that probably less than 15% of the population actually benefits from the GDP growth. The country has a debt overhang of about US $30 billion with high servicing requirements. Currently about 65- 70% of the population lives below the poverty line, half of which probably lives on less than half a dollar per day. The situation rather than improve has been worsening over time.”

The weak point of the Nigerian economy is not unconnected to its reliance on oil. The

initiation of petroleum in the Nigerian economy in the late 60s and early 70s brought

advantages and disadvantages. The core advantages were increase in government returns,

visible rise in industrial investment, balance of payment surplus, growth in construction

industries, rapid urbanization and apparent advancement in educational, health and

infrastructural development. Third National Development Program was initiated in 1973, by

the time it was said that money was no longer a problem in the economic development of

Nigeria but how to manage it. Oil makes about 90% of foreign exchange earnings and 75% of

government revenues and it contributes about 30% of GDP but employs only about 3% of the

labor force (Akpobasah, 2004). The main disadvantage of the oil boom is over dependence of

the economy on one commodity which was petroleum. Other disadvantages comprise

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ignorance of agriculture which was the mainstay of Nigerian economy in 60’ss and 70’s and

the rural sector at the expense of urban centers and over dependence on external sector for

food supply and industrial raw materials. Nigeria is gifted with plentiful environmental

resources however, high population growth rate at about 3 percent and increasing demand for

these resources threaten environmental sustainability.

Human Capital Development

Human beings are the most important promising soource of growth in productivity, growth

and development. The development and use of human capital is vital for economic growth.

Though, the illiteracy rate in Nigeria is high and many workers are unskilled that results in

low productivity. The main source of output in any country is increase in productivity.

Technology and tools are made by humans and can only be used by people. As the global

economy move to more knowledge-based sectors skills and human capital development

becomes a fundamental concern. The prime hub of Nigeria has been finding a way to speed

up the growth rate of national income and to connect in structural renovation of her

continuation and resource based economy to a production and consumption based economy in

order to break the cycle of poverty, low productivity and sluggishness. Human capital refers

to the abilities and skills of human resources and human capital development refers to the

process of acquiring and increasing the number of persons who have the skills, education and

experience which are critical for the economic growth of the country ( Harbison, 1962). Thus,

what really matters in Nigeria is the empowerment of people and the recruitment of economic

surplus into productive investment channels. There is also the need for the Nigerian economy

to abolish or reduce those limitations towards human capital development so as to augment

fast economic growth. The illiteracy rate is very high. Majority of the workers are unskilled

and make use of obsolete capital, equipment and techniques of production. The marginal

productivity is very low which leads to low real income, low savings, low investment and

accordingly low rate of capital structure (Johnson, 2011). Human capital development is

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valuable and vestiges an indispensable tool of economic growth and development in Nigeria.

The primary, secondary and tertiary school enrolments, total government expenditure on

health and on education is considerably associated with economic growth in Nigeria.

Conclusion

This paper has carefully revealed the greatest obstacles of Nigeria in growth and

development. It examined the problems of economic development in Nigeria and the paper

also suggested some viable strategies needed to stimulate sustainable development in Nigeria.

It is the outcome of this paper that if these strategies are realistically and judiciously pursued,

Nigeria will be well positioned in the global economy.

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References

1. Ofeimun, O.(1993). To Safe the Nigerian Economy: The Fallacy of Structural Adjustment, the Imperative for a Public Sector-Driven Economy and Confronting the Corruption Industry, The African Guardian, pp. 18-20

2. CIA World Fact Book, Statistics of Nigerian Foreign Trade, https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html

3. Akova, Y., (2012). Nijerya Bilgi Notu, T.C. Ekonomi Bakanlığı İhracat Genel Müdürlüğü.

4. Johnson, O, A., (2011). Human Capital Development and Ecocomic Growth in Nigeria. European Journal of Business and Management, Vol 3, No.9., Nigeria.

5. Akpobasah, M. (2004). The Development Strategy for Nigeria, Presented at Overseas Development/Nigerian Economic Summit Group Meeting on Nigeria, London.

6. Harbison F.H. (1962): Human resources development planning in modernizing economies; international labor review pp453-458.

7. Ofeimun, O.(1993) ''To Safe the Nigerian Economy: The Fallacy of Structural Adjustment, the Imperative for a Public Sector-Driven Economy and Confronting the Corruption Industry '',The African Guardian, pp. 18-20.

8. Oluwatoyin, A., Lawal, T. (2011). National Development in Nigeria: Challenges and Prospects. Journal of Public Administration and Policy Research, Vol. 3(9), pp. 237-241. Retrieved from http://www.academicjournals.org/jpapr. Doi: 10.5897/JPAPR11.012