Economic planning and management in nigeria: a comparative analysis of sap and needs

Thesis Overview

<p> </p><p>INTRODUCTION</p><p>Nigeria, with a population of 120 million, is Africa’s most populous country and the continent’s third largest economy. Oil dominates the economy, accounting for about 80 percent of federal government revenues, and 95 percent of foreign exchange earnings. With a continuously declining per capita income and comparatively unfavourable social indicators, Nigeria is one of the poorest oil producing countries, since its independence in 1960, the country has undergone major political and economic changes. It attempted to forge a unified nation out of diverse regional, ethnic, and religious groups through a federal structure of government, whose leadership has changed no less than eleven times, mostly through military coups. During the 1970s, Nigeria evolved from a poor agricultural economy into a relatively rich, oil-dominated one. In 1969 the oil sector accounted for less than 3 percent of GDP and a modest US$130; and more than half of GDP was generated in the agricultural sector. By 1980, the oil sector had come to account for nearly 30 per cent of GDP, oil exports totaled US$25billion (96 percent of total exports), and per capital income exceeded US$1,100.</p><p>Following the discovery and exploration of oil, the economy experienced many symptoms of the “Dutch disease”, with the real effective exchange rate appreciating steadily during the 1970s. The steady erosion of competitiveness of the non-oil tradable goods sector was reflected in the substantial decline of agricultural exports, which began in the mid-1960s, and continued through 1976, when oil production reached its peak. Notwithstanding the dramatic rise in oil revenue in the 1970 the Government failed to strengthen public finances. The excessive expansion of public expenditure, from an average of 13percent of GDP during 1970-73 to 25 percent in 1974-80, moved the fiscal balance from a small surplus to a deficit, averaging 2/2 percent of GDP a year. The monetary financing of these deficits contributed to a rapid growth in broad money and a sharp acceleration in inflation. The real effective appreciation of the naira that followed the surge in oil prices towards the end of 1973 eroded Nigeria’s competitiveness, and growth of real GDP slowed markedly. A buoyant oil sector sustained an average external current account surplus of ½ percent of GDP during this period, while gross international reserves averaged the equivalent of about seven months of imports. By 1980, the country’s external debt was only US$4.1billion, or 5 percent of GDP, and the debtservice ratio was a modest 3.7 percent. The economic policy orientation during the 1970s left the country ill prepared for the eventual collapse of oil prices in the first half of the 1980s. Public investment was concentrated in costly, and often inappropriate, infrastructure projects with questionable rates of return and sizeable recurrent cost implications, while the agricultural sector was largely neglected. Nigeria’s industrial policy was inward-looking, with a heavy emphasis on protection and government controls, which bread an uncompetitive manufacturing sector. Nonetheless, Nigeria’s economy has remained dominant in Africa. To reverse the worsening economic fortunes ill terms of declining growth, increasing unemployment, galloping inflation, high incidence of poverty, worsening balance of payment conditions, debilitating debt burden and increasing sustainable fiscal deficits, among others, government embarked on austerity measures in 1982. Arising from the minimal impacts of these measures, an extensive structural adjustment programme was put in place in 1986 with emphasis on expenditure reducing and expenditure switching policies as well as using the private sector as the engine of growth of the economy via commercialization and privatization of government owned enterprises. Though some benefits were achieved at the initial stage, such benefits could not trickle down to the poor. Rather, the incidence of poverty keeps on increasing. As such, resistance came up from many stakeholders, particularly the civil society, the labour unions and the organized private sector. Even the economic reform programmes of the present democratic government were not spared from this resistance. In fact, it is increasingly becoming difficult to implement any credible economic reform programmes given people’s experiences with the previous ones. In this analysis, two economic policies have been put in place to ensure the efficiency and effectiveness of economic planning. The National economic empowerment and development strategy can be regarded as an economic reform which was put in place to draw Nigeria out of stagnation and place her among the leading economics in the world. The faults of NEEDS transcended beyond the national level and also applicable in the state levels that transit to NEEDS. Further advances were made during the military junta of General Ibrahim Babangida who accounted the SAP economic policies into the country. The activities of SAP are initiative of the economic reformist whose intention is to subject the control of the economy on private sectors. Imperative in the policy of SAP is that its orientation of the western like which negates national approach to the development of the economy. Finally, in this research, we are entering into the intercourse behind the planning of an economy and the management of the economy using certain economy and the management of the economy using certain economic policies (SAP and NEEDS) is repelling policies i.e. one seek to achieve certain positive strategies while the other was atavistic in nature having led to degradation of certain sector. NEEDS in its own components sought to revamp the economy.</p> <br><p></p>