Historical Context of Nigeria and National Economic Planning

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.