Nigeria is Africa’s most populous country with nearly 186 million people. Its GDP of $405 billion makes it Africa’s largest economy. Since 2000, life expectancy has increased steadily from 46 to 53 years, and child mortality fell from 187 per 1000 live births to 104 (The World Bank, 2019).

Despite these promising statistics, Nigeria’s economic progress has not reached a substantial amount of the population. In 2018, Nigeria surpassed India as the country with the most people living under the $1.90-per-day poverty line (Adebayo, 2018). With a Gini coefficient of .43, Nigeria remains highly unequal (UNDP, 2016).

Proportionally, Nigeria’s economy is led by the service sector, which comprises around 30% of its GDP. Next follows the agriculture sector (24%), the oil industry (18%), and then its flailing manufacturing sector (9%). Oil makes up 55% of the country’s total export revenues (Kingsley, 2017).

National politics are dominated by the All Progressives Congress (APC) which in 2015 defeated the previously dominant Peoples’ Democratic Party (PDP). In 2019, Nigeria will hold its sixth general election since the establishment of the Fourth Republic. Olusegun Obasanjo’s presidency, from 1999 to 2007, sought to put Nigeria on a path to stable economic development after the turmoil of previous decades. An important aspect of his second term as president was the rollout of the National Economic Empowerment and Development Strategy (NEEDS). NEEDS became Nigeria’s guide for its economic policies from 2004 to 2007 and suggested to the international community that the state was prepared to play a positive role in the economy.

Since such plans require an extensive amount of time and resources it is important to answer the age-old question: is it worth it?

My findings suggest that even with the shortcomings of past plans, including NEEDS to reduce poverty and develop the country, Nigeria is better off pursuing development plans that serve the interest of the country’s poorest. The state should not be afraid to play a larger role in the economy.

Section II explores the historical context of the role Nigeria’s state has played in creating national development plans and the lead up to NEEDS. Sections III through V discusses NEEDS, and its impact with special attention given to its role in poverty reduction and national development planning. Section VI summarizes Nigeria’s development planning in terms of its historical context, impact, and legacy.

The origin of economic planning in Nigeria begins after the Second World War. Colonial administrators strived to make the economic environment more attractive for foreign investment. Thus, in 1946 the government created the Ten-year Development Plan to organize budget allocations over the following decade. The crux of the plan aimed to increase economic infrastructure and improve education (Onitiri, 1971). The colonial administration anticipated that by the end of the plan, transport and communication services would noticeably improve, increasing the production and export viability of the colony’s cash crops (Ikeanyibe, 2009).

Though infrastructure and education did see some improvements over the course of the Ten-year Development Plan, it proved to be largely ineffectual at progressing the Nigerian economy to a more productive phase (Onitiri, 1971).

With the independence movement led by the charismatic Nnamdi Azikiwe on the rise, the educated political class demanded a national government that would serve the economic interests of the Nigerian people. In 1960, when the British relinquished their political authority over the country, a national government made up of Nigerians finally had their chance.

Nigeria’s First National Development Plan lasted from 1962 to 1968. The goal of the plan was to take the country to a stage where it can self-finance its own development through the accumulation of national savings (Onitiri, 1971). Though foreign experts participated in the crafting of the First National Development Plan, only a handful of Nigerian administrators were left to put the plan into action, leading to a lack of proper coordination in properly implementing desired projects (Ikeanyibe, 2009).

As the 1960s progressed, Nigeria began to run a balance of payments deficit—draining the much-needed funds for development. On top of that, a military coup in 1966 led to the outbreak of the Nigerian Civil War (1967-1970), bringing the immediate focus on national development to a halt (Onitiri, 1971).

From the chaos of the Civil War emerged the Second National Development Plan of 1970-1974 under the regime of Yakubu Gowon, who took power after the coup in 1966. The Gowon regime sought to have a more aggressive role in developing the economy than did past governments. The Second National Development laid out five goals (Ikeanyibe, 2009, 201):

1. a united, strong and self-reliant nation;
2. a great and dynamic economy;
3. a just and egalitarian society;
4. a land of bright and full opportunities; and
5. a free and democratic society

Whereas, the creation of the First National Development Plan was closed off to an elite group of administrators, its successor received input from boards consisting of members of academia, business, and other parts of civil society (Ikeanyibe, 2009). Issues pertaining to inequality and promoting the agricultural sector were highlighted much more significantly in the second plan than the first. Another core component of the second plan was the Nigerianization of large businesses. Public ownership of financial institutions and insurance companies increased, and dependence foreign investment was to be limited (Ibietan, et al. 2013).

The oil industry was central to this plan, as about half of Nigeria’s export revenues at the time came from the exportation of oil (Onitiri, 1971). Yet, the country’s reliance on oil as well as systemic corruption engendered the lack of needed funds to finance the newly announced projects from the Second Development Plan.

Nigeria from 1975 to 1980, experienced a series of coups including one by future Fourth Republic president Olusegun Obasanjo. It was also the period of the country’s Third Development Plan (Ibietan, et al. 2013). The plan looked to continue the Nigerianization of the previous plan as well as economic diversification, agriculture investment intensification and universal primary education. However, even though agriculture was a key component of the plan, little funds ended up going towards the country’s most populated sector. Five percent of the total funds went toward the agrarian sector, and less than twelve percent was spent on social welfare measures. It should be no surprise that during this period agricultural output fell by two percent per year. Thus, though the Third Development Plan saw remarkable advances in the growth in manufacturing and construction, it overall failed to meet its visionary objectives (Ibietan, et al. 2013).

wo years after Shehu Shagari was sworn in as the elected president of the Second Republic in 1979, his government launched Nigeria’s Fourth National Development Plan which would be Nigeria’s last pre-Fourth Republic grand national planning scheme (Falola et al. 2008). One of the notable aims of the new plan was export promotion. The total cost of planned public and private investment at N82 billion signified that this would be the country’s boldest national economic program. For the first time, local governments were given a key role with the implementation of various components of the plan. Though there were noticeable improvements due to increased investments in infrastructure, education and healthcare, many of programs faltered due to a lack of enough funds, drawing from the collapse of oil prices in the 1980s (Ibietan, et al. 2013).

Table 1 in the Appendix compares the economic growth rates during the time when each of the four economic plans were in place. The Second Plan generated the highest annual growth rate at about 8% per year, while the economy during the First and Third plans grew at about 5% per year. Meanwhile, the Fourth plan struggled to create any substantial growth with a yearly rate at a mere 1%.

Additionally, even with the liberalizing of national politics, corruption in Nigeria became more widespread under the Second Republic. Numerous instances of corruption occurred in federal administrations such as the National Youth Service Corps, the Nigerian External Telecommunications, the Federal Mortgage Bank, the Federal Capital Territory Administration, and the Central Bank of Nigeria (Falola et al. 2008).

In 1983, the Second Republic came to a swift end when another future president under the Fourth Republic, Muhammadu Buhari, took power via military coup. Buhari was disposed by Ibrahim Babangida two years later in 1985 (Falola et al. 2008).

Babangida’s regime started a period in Nigeria’s history where the state took a more hands-off approach to national development. With external debts approaching N22 billon, the Nigerian government engaged in structural adjustment in 1986 (Ikeanyibe, 2009). The structural adjustment program (SAP) had three core objectives (Ibietan, et al. 2013, 304):

1. To restructure and diversify the productive base of the economy in order to reduce dependence on the oil sector and on imports;
2. to achieve fiscal and balance of payments viability over the period; to lay the basis for a sustainable non-inflationary growth;
3. to reduce the dominance of unproductive investments in the public sector by improving public sector efficiency and enhancing the growth potential of the private sector.

The devaluation of the naira, the removal of subsidies, privatization, and the deregulation of interest rates were the core policies that were enacted during this era. The results were not as remarkable as promised. Along with this, interest rates skyrocketed, making it incredibly difficult for business and individuals to take out loans, the manufacturing sector crumbled, and rural poverty and unemployment grew

After the failure of structural adjustment, the Nigerian government resorted back to at least some form of national economic planning with the creation of Rolling Plans from 1990 to 1998. The Rolling Plans would indicate short term and medium-term budget allocations. The 1996 perspective plan was created under the military government of Sani Abacha which would set the foundation for Vision 2010. Vision 2010 encompassed short-term, medium-term, and long-term planning that would be initiated over the following fifteen years. However, after Abacha died in 1998, the enthusiasm for Vision 2010 was lost (Ikeanyibe, 2009).

With the creation of the Fourth Republic and the initiation of democratic elections in 1999, former dictator and now democratically elected president Olusegun Obasanjo looked to define a new era for Nigeria’s economic development. The National Economic Empowerment and Development Strategy (NEEDS) became the central document for the nation’s development.

Preceding NEEDS was the National Economic Direction (1999-2003). The measure combined sweeping privatization and deregulation with increased spending on social welfare programs. Yet, the enactment of these promised reforms was slow even though the government was receiving new streams of funds from the liquidation of public enterprises, rising oil prices, and the repossession of Abacha’s stolen wealth (Ikeanyibe, 2009).

After winning reelection in 2003, Obasanjo and other government officials declared it was time for a newer, bolder plan to guide Nigeria’s development. Thus, came the creation of the National Economic Empowerment and Development Strategy (NEEDS). According to President Obasanjo, the stated goal of NEEDS was to: “… mobilize the resources of Nigeria to make a fundamental break with the failures of the past and bequeath a united and prosperous nation to generations to come (IMF, 2005, iii).” The four priorities of NEEDS focused on (IMF, 2005, iii):

1. laying a solid foundation for sustainable poverty reduction,
2. employment generation,
3. wealth creation,
4. value reorientation

NEEDS along with its state version, the State Economic Empowerment and Development Strategy (SEEDS), and localized version, the Local Government Economic Empowerment and Development Strategy (LEEDS) sought to unify the country on a path of inclusive development. On paper, NEEDS strived for a five percent decrease in poverty per year from 2004 to 2007 (IMF, 2005). While NEEDS acknowledged the importance of private sector growth, it also accepted the critical role of the government in tackling poverty and that it is the government’s duty to ensure that every Nigerian “has the right to adequate water and sanitation, nutrition, clothing, shelter, basic education, and health care, as well as physical security and the means of making a living” (Ugwu, 2012, 26).

Was NEEDS the key to poverty reduction? Could a second-term democratically elected government finally bring prosperity to country’s most unfortunate?

Figure 1 in the Appendix shows Nigeria’s relative poverty rates from 1980 to 2010. From 1980 to 2004 the rate of poverty doubled from 27% to 54%. Six years after NEEDS, poverty again increased to 69%. What went wrong with the government’s poverty reduction strategy—one of the core focuses of NEEDS?

According to Ugwu (2012), the greatest impediment to poverty reduction was NEEDS’ dependence on the private sector. Since the poor are unable to participate in many market activities, the private sector has little incentive to engage with the country’s worse off. Instead, Ugwu argues for a more active developmental state which plays a more direct role in economic affairs than what is prescribed through NEEDS. As Ugwu states:

Whether we opt for hard or soft state, the Nigerian state must retain the capacity to choose ―winners and allocate resources preferentially according to an overall plan of development that answers to national priority. And in our situation such a priority is drastic reduction of general poverty and class, gender, and region-specific poverty. (p. 47)

Ugwu also identifies national leadership as a critical component to NEEDS’ failure to ameliorate poverty. He identifies the lack of credibility of the Obasanjo government, especially after the “rigged” 2003 election, as the source of the unwillingness of the national government to properly reduce poverty. He cites the failure of the government to effectively engage with civil society and Obasanjo’s despotic tendencies as a cause for social and labor unrest against much of the government’s agenda (For more on labor mobilization during this period see Eze, 2014). Furthermore, Ugwu sees policies such as land reform, progressive taxation, and providing credit access for the poor as key measures for poverty reduction.

Additionally, Ugoani (2017) indicates that corruption was the most important factor that limited poverty reduction. He describes how billions of naira meant for development projects have been siphoned off by government officials. A strategy of good governance must precede the implementation of pro-poor programs in order to maximize poverty reduction.

Furthermore, Ugoani also presents the shortcomings of the government’s education program initiated under NEEDS as an indictment of the government’s failure to execute a long-term poverty reduction strategy. He finds that even after the enactment of compulsory education, millions of Nigerians are not in schools and eighty-percent of the teachers do not have the necessary skills. This, along with the failure to supply enough universities for its post-secondary students, were critical for Nigeria to miss the education targets of the Millennium Development Goals.

Similarly, Innocent, et al. (2014) presents the problem of poverty reduction in Nigeria as a problem of poor governance. Just as during NEEDS and past periods, decision making about how to address poverty is left to an elite few. The people who are the targets of the government’s new policies are rarely, if ever, consulted. Instead, while ambitious anti-poverty programs are unveiled every so often, they never receive the proper funding nor administration to successfully implement these policies.

One of the most influential proponents of national planning for developing countries after the Second World War was the Polish economist Paul Rosenstein-Rodan. Why should states engage in economic planning? Rosenstein- Rodan (1963, 123) explains:

The free and unimpeded mechanism of market forces would lead to a maximum national income according to the liberal classical doctrine. Any conscious deliberate active economic policy designed to influence the amount and the composition of investment could not, according to this school, raise national income in the long run. It is our contention that the opposite is true, that an economic policy designed to influence the amount and composition of investment can raise the rate of economic growth and increase national income. In addition, it can also aim at realizing other desirable social objectives which market forces alone—even according to liberal doctrine— could not achieve.

If economic planning provides the answer for developing countries, how come Nigeria failed to see many of the promised benefits? Is this an indictment of planning itself? Or are the shortcomings unique to Nigeria’s institutional arrangements?

The latter seems to be a more appropriate answer than the former. As Wade (1989) describes, economic planning was central to the success of the post-war East Asian economies. Clear economic objectives matched with a strong state that will go as far as needed to discipline the private sector is a recipe for grand economic transformation. Also, as Chang (2002) details, developing countries during the pre-1980s planning era grew much faster than the post-1980s when developing plans worldwide were abandoned.

Analyzing the Chilean economy under Allende, Rosenstein-Rodan (1974) designates the poor economic outcomes of the time as a result of the lack of smart, creative planning, not because of planning itself. (For how the economic elites played a decisive role in destabilizing the economy during the Allende government see Girardi and Bowels, 2017).

Ikeanyibe (2009) notes though the past development plans were unsuccessful due to a variety of reasons such as corruption, unpreparedness, and lack of interest, NEEDS failed at sustained development because it was more interested in promoting a model of development that satisfied the desires of the international financial institutions and western developed economies rather than serve the interest of the Nigerian people.

As stated in the previous section, Ugwu (2012) recommends that the Nigerian state should be so committed to national development, that in doing so the state becomes the prime instigator for inclusive economic prosperity. Yes, development planning is still very much practical for Nigeria’s future if government officials are willing to apply it in a way that puts poverty reduction and structural transformation at the forefront. Planning can happen without the mass corruption and carelessness of the past plans, and without the rigid ideology that confined foreign imposed policies such as the structural adjustment programs.

Vision 2020, Nigeria’s current development initiative, has the admirable goals of a life expectancy of seventy years, a 40% contribution of manufacturing to GDP, among other things (Ibietan, et al. 2013). Is Nigeria currently capable of meeting these goals? Likely not. Though, sometime in the future, Nigeria may one day have the plan-focused developmental state that its people deserve.

Nigeria has had a long history with development planning. The four grand economic planning programs launched in the 1960s, 1970s, and 1980s indicated some level of enthusiasm for state-empowered development. With the introduction of structural adjustment in the 1980s, proactive and extensive planning came to a halt. The Obasanjo’s government initiation of the National Economic Empowerment and Development Strategy (NEEDS) brought broad government planning back to the forefront of Nigeria’s political economy. However, NEEDS ultimately failed to deliver many of its promised benefits especially its central commitment to poverty reduction. This was due to several factors including NEEDS’ conservatism, economic mismanagement, corruption, a lack of communication between the government and civil society, and not including the voices of the poor in public decision making. Though Nigeria has struggled with pursuing economic planning in the past, state-led development planning should still be recognized as a critical aspect of national development for Nigeria. In fact, the state should be more engaged in economic affairs to meet the needs of its people, especially its poorest.

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Table 1: Growth Rates during the four National Development Plans

Source: Ikeanyibe, 2009

Figure 1: Relative National, Urban, and Rural Poverty in Nigeria, 1980-2010

Source: Dauda, 2017