The Federal Republic of Nigeria Political and Economic Change By Ajay Kannan

Overview 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)

Pre-colonial Era 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

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 Nigerians wanted independence 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

Modern 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

North-South Tensions 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://www.movements.org Source: http://nigeriansabroadlive.com/wp-content/uploads/2010/12/NigeriaMap_resources.jpg

Nigeria’s Economy Today 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

Economic Problems 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

History of Oil in Nigeria 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

Oil Prices’ Effect on the Economy

Oil Profits 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

The Resource Curse 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

Debt 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)

Other industries 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

Economic Improvement 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

Bibliography Almond, Gabriel, et al. Comparative Politics Today: A World View. 9th ed. 1911. New York: Pearson Longman, 2002. Print. Lewis, Peter M. "The Dysfunctional State of Nigeria." Center for Global Development. N.p., n.d. Web. 19 Feb. 2011. <http://www.cgdev.org/doc/ shortofthegoal/chap3.pdf>. Nellor, David. “Nigeria Needs Sustained Reforms to Build on Success .” IMF Survey Magazine 15 Feb. 2011: n. pag. Web. 14 Feb. 2011. <http://www.imf.org/external/pubs/ft/survey/so/2008/CAR021508A.htm>. Obadina, Tunde. "Nigeria Unveils New Privatization Plan." Africa Recovery. United Nations, Dec. 1998. Web. 19 Feb. 2011. <http://www.un.org/ ecosocdev/geninfo/afrec/subjindx/123nigr.htm>. "OlusegunObasanjo." Encyclopædia Britannica. Encyclopædia Britannica Online. Encyclopædia Britannica, 2011. Web. 17 Feb. 2011. <http://www.britannica.com/EBchecked/topic/423633/Olusegun-Obasanjo>. "SaniAbacha." Encyclopædia Britannica. Encyclopædia Britannica Online. Encyclopædia Britannica, 2011. Web. 17 Feb. 2011. <http://www.britannica.com/EBchecked/topic/701368/Sani-Abacha>. "ShehuShagari." Encyclopædia Britannica. Encyclopædia Britannica Online. Encyclopædia Britannica, 2011. Web. 17 Feb. 2011. <http://www.britannica.com/EBchecked/topic/537642/Shehu-Shagari>. Ukaegbu, Chikwendu Christian. "The Structure of Nigerian Industries and the Utilization of Scientific and Technological Manpower." The Journal of Economic and Social Studies 33.1 (1991): n. pag. University of Wyoming, Department of Sociology. Web. 19 Feb. 2011. <http://uwacadweb.uwyo.edu/ chris/Articles/Structure.pdf>. 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>. - - -. Dept. of State. Background Note: Nigeria. By Bureau of African Affairs. U.S. Department of State: Diplomacy in Action. N.p., 3 Feb. 2011. Web. 14 Feb. 2011. <http://www.state.gov/r/pa/ei/bgn/2836.htm>.

Questions?

Activity Discussion Questions

Question #1 Do you think the discovery of oil in Nigeria helped or hurt Nigeria in the long run?

Question #2 What is the most suitable and realistic course of action for Nigeria to stabilize and grow its economy?

Can Nigeria ever become a developed economy? Question #3 Can Nigeria ever become a developed economy?

Question #4 Do you think the Nigerian government has the potential to become a liberal democracy, and do you think it is likely?

Do you think Nigeria will divide due to tribal tensions in the future? Question #5 Do you think Nigeria will divide due to tribal tensions in the future?

Question #6 Which is a more important goal for Nigeria to focus on: becoming a more peaceful, fair, and accountable democracy or improving its economy?