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Nigeria Planning
http://www.photius.com/countries/nigeria/economy/nigeria_economy_planning.html
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Before 1945 the colonial government undertook no serious comprehensive planning. Nigeria's earliest national plans, the 1946-55 Ten-Year Plan of Development and Welfare (with plan revisions, 1951-55) and the 1955-60 plan (later extended to 1962), were framed by colonial administrators. As the authors of the First National Development Plan, 1962-68 (henceforth, first plan) wrote, these "were not `plans,' in the truest sense of the word . . . [but] a series of projects which had not been coordinated or related to any overall economic target." After 1960, however, development planning had a broad scope, encompassing government policies to achieve national economic objectives, such as accelerated growth and higher levels of average material welfare. This planning affected the policies of such agencies as the central bank, state-owned enterprises, the Ministry of Education, marketing boards, state-level departments, and extension services.

    Nigerian plans included economic forecasts, policies toward the private sector, and a list of proposed public expenditures. Plans did not constitute commitments by public departments to spend funds. Although Nigerian political leaders made decisions about general objectives and priorities for the first plan, foreign economists were the main authors of the actual document. Its authors favored decentralized decision making by private units, disregard of major discrepancies between financial and social profitability, and high economic payoffs from directly productive investments (as opposed to indirect returns from social overheads). They discouraged increased taxes on the wealthy (out of a fear of dampening private incentive), and advocated a conservative monetary and fiscal policy emphasizing a relatively small plan, openness to foreign trade and investment, and reliance on overseas assistance. Foreign aid was set at onehalf of public sector investment.

    Nobel economist W. Arthur Lewis has suggested that the main weaknesses of the 1962-68 plan were incomplete feasibility studies and inadequate evaluation of projects, accompanied by meager public participation, followed by excessive political intervention in economic decisions. Moreover, insufficient attention was paid to the small indigenous sector, and the machinery for implementing developments in the public sector was unsatisfactory. Lewis noted that the most important aspects of Nigeria's 1962-68 plan were "how the government proposes to raise the money and to recruit the personnel to carry out its objectives."

    Postwar reconstruction, restoring productive capacity, overcoming critical bottlenecks, and achieving self-reliance were major goals of the Second National Development Plan (1970-74). The replacement cost of physical assets damaged and destroyed in the civil war with the secessionist Igbo area in the southeast, then known as Biafra, was estimated to exceed N600 million (then about US$900 million).

    The United Nations (UN) Center for Development Planning, Projections, and Policies observed that Nigeria's real growth in GDP between 1970 and 1974 was 12.3 percent per year. The annual target had been only 6.2 percent. Nigerian growth could be explained by factors largely outside the planners' purview--rapid oil industry growth and sharply increasing oil prices.

    Announced in March 1975, the Third National Development Plan (1975-80) envisioned a twelvefold increase in the annual rate of public capital expenditures over the previous plan period. This document included the statement, "There will be no savings and foreign exchange constraints during the third plan period and beyond." The document outlined ambitious plans to expand agriculture, industry, transport, housing, water supplies, health facilities, education, rural electrification, community development, and state programs. The third plan also designated substantial funds for prestige projects, such as Festival of African Culture (FESTAC) in Lagos.

    Amid the euphoria of the 1974 oil price boom, the Ministry of Economic Development approved and added numerous projects for other ministries not supported by a proper appraisal of technical feasibility, costs and benefits, or the technical and administrative arrangements required to establish and operate the projects. According to Sayre P. Schatz, who advised the Ministry of Transport while it prepared feasibility studies for the plan in 1974,

    "Economic reasoning gave way before economic enthusiasm," and the necessary coordination and implementation were ignored.

    Inflationary minimum wage and administrative salary increases after October 1974, in combination with the slowing of the economy, made budget shortfalls inevitable. In June 1975, several state and local governments did not receive their monthly subsidies from the federal government. Just before the July 29, 1975, coup in which head of state General Yakubu Gowon was toppled, government workers in several areas threatened to impair vital services unless their June wages were paid.

    In March 1976, in response to an economy overheated by demands for new programs and higher wages, General Olusegun Obasanjo, then head of state, pointed out that petroleum revenue was not a cure-all. Many projects had to be postponed, scaled down, or canceled when oil-revenue-based projections made in 1974-75 later proved too optimistic. Projects tended to be retained for political reasons, not because they were considered socially or economically useful by the Central Planning Office of the Supreme Military Council.

    The civilian government that tack office on October 1, 1979, postponed the beginning of the fourth plan (1981-85) for nine months. Whereas the plan's guidelines indicated that local governments were to be involved in planning and execution, such involvement was not feasible because local governments lacked the staff and expertise to accept this responsibility. The plan was also threatened by falling oil revenues and an increased need for imported food that had resulted from delays in agricultural modernization. Projected to rise 12.1 percent annually, exports actually fell 5.9 percent yearly during the plan, as a recession among the nations of the Organisation for Economic Co-operation and Development reduced demand for Third World imports. As exports declined, the capacity to import construction materials and related capital goods also fell, reducing growth in the construction, transport, communications, utilities, and housing sectors.

    Nigeria was heavily dependent on agriculture, with the sector accounting for more than 40 percent of pre-1973 GDP. But in the decade up to 1983, agricultural output in Nigeria declined 1.9 percent and exports fell 7.9 percent. Agricultural imports as a share of total imports rose from 3 percent in the late 1960s to 7 percent in the early 1980s. Nigeria's unfavorable agricultural development resulted from the loss of competitiveness among farm exports as the real value of the Nigerian naira appreciated substantially from 1970 to 1972 and from 1982 to 1983.

    Thanks in large part to the overthrow of Nigeria's second civilian administration, the Second Republic headed by President Shehu Shagari, at the end of 1983 and of the military government of General Muhammadu Buhari in 1985, the Fifth National Development Plan was postponed until 1988-92. Continuing the emphases of the SAP, the fifth plan's objectives were to devalue the naira, remove import licenses, reduce tariffs, open the economy to foreign trade, promote nonoil exports through incentives, and achieve national self-sufficiency in food production. The drafters of the fifth plan sought to improve labor productivity through incentives, privatization of many public enterprises, and various government measures to create employment opportunities.

    In late 1989, the administration of General Ibrahim Babangida abandoned the concept of a fixed five-year plan. Instead, a three-year "rolling plan" was introduced for 1990-92 in the context of more comprehensive fifteen- to twenty-year plans. A rolling plan, considered more suitable for an economy facing uncertainty and rapid change, is revised at the end of each year, at which point estimates, targets, and projects are added for an additional year. Thus, planners would revise the 1990-92 threeyear rolling plan at the end of 1990, issuing a new plan for 1991-93. In effect, a plan is renewed at the end of each year, but the number of years remains the same as the plan rolls forward. In Nigeria, the objectives of the rolling plan were to reduce inflation and exchange rate instability, maintain infrastructure, achieve agricultural self-sufficiency, and reduce the burden of structural adjustment on the most vulnerable social groups.

    Data as of June 1991


    NOTE: The information regarding Nigeria on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Nigeria Planning information contained here. All suggestions for corrections of any errors about Nigeria Planning should be addressed to the Library of Congress and the CIA.

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Revised 27-Mar-05
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