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Hokkaido University
Faculty of Economics and Business Administration
Nigeria: Prospects and Challenges for Becoming a Global Economic
and Political Power
Ezugwu Chigozie Michael
A Practical Research and Discussion paper carried out as an Independent
Study II
Supervisor:
Prof. Nobuhito Suga
August, 2013
Table of Contents
Chapter One: Introduction
1.2Definition and Operationalization of Basic Concepts
Chapter Two: Country Study
2.1 History of Nigeria
2.2 Current State of Nigeria Economy
2.3 The Political Situation in Nigeria
Chapter Three: Nigeria Economic and Political Prospects
3.1 Economy
3.1.1 Agriculture
3.1.2 Natural Resources
3.1.3 Manufacturing and Distribution
3.1.4 Oil and Gas
3.1.5 Entertainments and Tourism
3.1 6 Telecommunication and Social Media
3.2 Demography
3.3 Democracy, Government and Politics
3.4 Education
Chapter Four: Challenges Facing Nigeria Economy
4.1 Economic Challenges
4.2 Agric and Natural Resources Challenges
4.3 Government and Democracy Challenges
4.4 Educational Challenges
Chapter Five: Summary, Forecast, Conclusion and Recommendations.
5.1 Summary
5.2 Recommendations
5.3 Forecasts
5.4 Conclusion
Bibliography
Chapter One:
Introduction
For some years now, there has been series of researches focusing on
Nigeria`s development. Many of these researches tends to focus more on how
bad and poor the Nigeria economy and the nation as a whole have performed
in its 50 years of independent. Although there are no doubt as to whether
these claims by researchers that Nigeria as a country have failed in many ways
and have disappointed its citizens as far as ensuring economic development,
social order and peace and tranquillity is concerned. However, many of these
researches failed abinitio(from the beginning)to recognise the facts that
unique experiences shapes and reshapes both people and nations and that
these experiences tends to impact and affects nations both positively and
negatively. In the case of Nigeria, it was a negative impact due to the long
period of civil war, series of military coup and an era of unpatriotic and
visionless elites who constituted themselves as leaders.These factors have led
to economic, social, political and educational downturn and breakdown of
infrastructure, social and cultural forces and the collapse of both political and
economic structures and institutions.
In the mean time, while most of the previous researches seem to be
more antagonistic and condemning, some scholars, institutions and agencies
have had the course to change their thinking and opinions about Nigeria as a
total failure in every sense of it. This is because series of researches which
started emerging as soon as Nigeria embraces democratic rule have not only
portrayed the prospects of Nigeria as a strategic nations that have started
developing and recognising it potentials and positioning itself as one of the
most important nations to watch out for in the nearest future, but have also
predicted that Nigeria will soon be emerging as one of the world`s economic
power.
The recognition of this stern from the fact that there has been proven
evidences of significant improvement in both the economic and political
spheres of Nigeria which have provided both the bases and hopes that the
potentialities and prospects of Nigeria can actually be realised.
It is against this back drop that this research is instituted. It major
objectives will be to x-ray some of these potentials and prospects that stands
to catapult Nigeria and make its journey to development an accelerated one.
Part of the research will be focusing on examining some obvious challenges
facing Nigeria as a country today with recommendations on how to solve such
challenges and finally predictions will be made based on the recommendations.
1.2Definition of Basic Concepts.
Here some basic definitions will be made on some of the major terms
forming part of the topic under discussion and concrete meaning and
understanding of the term given.
In doing this, we will look at some terms like;
• Nigeria
• Prospects
• Challenges and
• Global Economic and Political Power.
Nigeria:
Nigeria as a name emanated from the Niger River, which runs across
Nigeria. This name was first used by Flora Shaw, who later married Baron
Lugard, a British Colonial administrator in West Africa in the 19th
century to
describe an area surrounding the River Niger. Nigeria is a federal constitutional
republic located in the West African region. That is made up of 36 states and
federal capital territory, in Abuja and with about 170 million populations.
Prospects:
The Longman Dictionary of contemporary English defined prospect in
many ways; in one form, it sees the word as the possibility that something will
happens.In other words, prospect can also be referred to as a particular event
which will probably occur in the future. And can be simply referred to as
chances of future success.
Challenges:
By challenges we mean factors, hindrances that make an achievement of
results difficulty. It is given by Longman as something that tests strength, skills,
or ability, especially in a way that is both interesting and difficult.
Global Economic and Political Power:
The Longman dictionary of ContemporaryEnglish sees global as
something affecting or including the whole world. Hence in this research
countries regarded as global economic and political power are countries that
have achieved greater success in both their economy and politics and have
been recognised either as evidenced in their GDP, or in the Classification by
global organisations like The World Bank, IMF, OECD, G8, G20, BRICS etc. This
also includes, being a member of some of this organisation. In a much precise
way, we mean here, being among the world`s top economies with flourishing
democracy and citizens freedom.
Chapter Two:
Country Study
2.1 History of Nigeria.
The history of Nigeria is as complex as the country itself. Ordinarily,
Nigeria is a territorial country in the West African region that shares land
border with the Republic of Benin in the west, Niger and Chad in the north,
Cameroun in the east while it coast lies on the Gulf of Guinea in the Atlantic
Ocean.
However, the word Nigeria was first coined by Flora Shaw, a Briton who
later married Lord Lugard a British Colonial administrator in West Africa in the
19th
Century to describe an area surrounding the river Niger. Ezugwu (2013),
writes that as an entity, the area called Nigeria today was occupied by various
tribal groups Like Igbo, Yoruba, Hausa Tiv, Nupe etc. as independent territory
or Kingdoms until it was first explored by the Portuguese around the 15th
century and later invaded and taken over by the British as it area of influence.
As he stated, in 1885 British claim of Nigeria had already gained wider and
global recognition and on January 1 1901, colonial government institutions and
structures were established. Hence, finally bringing together the Northern and
Southern protectorates together with the crown colony of Lagos in 1914, this
act of joining Lagos together with the Northern and Southern protectorates is
commonly referred to as amalgamation of Nigeria. Thereby, bringing more
than 300 ethnically diversified and linguistically difference communities into
one political unit called Nigeria. By October 1 1960, Nigeria gained
independence from Britain and in 1963 it achieved a republican status.
2.2 The Current state of Nigeria Economy
Currently, the World Bank report 2012 shows that Africa economy is the
fastest growing economy in the world. Nigeria is at the centre stage of this
economic advancement and growth. Having the largest market in the region
with abundance natural resources. It is currently regarded as a middle income,
mixed economy and emerging market. With a growing financial, service
communication and entertainment sectors. Nigeria is a major exporter of both
natural resources and manufacture products to other African Countries and a
major supplier of oil in the global market. Currently it is ranked 39th
in the
world in terms of GDP in (PPP) terms and currently having a major influence in
global economic sphere as one of the world most attractive investment
destinations due to its large market and fast growing economy. Iweala (2013).
2.3 The Political Situation in Nigeria
Nigeria is a federal republic modelled after the system practiced in the
United States of America, where the president is the head of state, head of
government and Commander-in-Chief of all armed forces. The political
situation in Nigeria has been characterised by violence and political killings
including a range of civil wars, various coup-de-tat and several political and
social crises before the emergence of democratic rule in 1999.
Noticeable cases are the three years civil war 1967-1970, the various
political crises, particularly, the June 12, 1993 election, the series of military
coup-de-tat that started from 1966 to 1998. The welcoming back of democratic
rule in 1999 led the Nigerian political climate into another dimension
altogether. The early period saw the era of god-fatherism, massive electoral
rigging, all forms of malpractices and high profiled political assassinations.
These actions no doubt, challenged the claims of Nigeria to democracy as
elections and every other political and electioneering activity are merely a
waste of time and resources as votes and elections are predetermined in
advance by some corrupt politicians before the actual elections.
However, things have greatly changed an analysis of the just concluded
2011 general election in Nigeria shows that it was peaceful, free and
transparent (BBC NEWS 2011). This was also affirmed by the U.S. State
Department (2011) which stated that the election was successful, with
substantial improvements from the previous cases.
Chapter three:
Nigeria Economic and Political Prospects
3.1 Economy:
The Nigerian economy had witnessed slow pace of growth and even drastic
decline many years after independence, due to some obvious challenges
necessitated by some social, political and economic underplay that
characterised the first 39 years of its existence, 1960-1999. Such factors as civil
wars, rampant political and social crisis, over whelming corruption, non
involvement of the local people in policy making and policy implementation,
lack of strong and visionary leaders, weak institutions, complete dependent on
petroleum economy etc have to a larger extent negatively affected the
economic development aspirations of Nigeria and resulted in a series of both
institutional failures, and major decline in developments activities.
However, with the enthronement of democratic rule in 1999, there seems to
be dramatic strides by the country to position itself properly in a bid to
ameliorating its already declining economic institutions. To this effect, many
ambitious projects and strategies have been instituted to speed up economic
development in order to reposition itself in a strategic position among
committees of nation. While most of these initiatives are yielding considerable
great results effort are still been intensified towards making Nigeria reclaim it
former title as “the giant of Africa” not only in population but also in economy.
Some of these initiatives and prospects envisaged as the key to making Nigeria
not only an economic hub in Africa but also a member of the global economic
power will be discuss in various sections below.
However, to know the position of Nigeria in the struggle for large chunk of the
global economies by difference nations, we will first look at the economic
indices of some of the developing economies. In doing this, I will look at GDP,
growth rate, population, income level, GDP rank, and stages of development of
these countries in a bid to show how Nigeria have taken up to the challenges
of economic development.
Table 1.1 Economic Indices of some selected countries
Countries GDP GDP
Rank Growth
Rate Income level
Classification Stage of
Development Population China 7.318
trillion 2nd 9.3 Upper
middle
income developing 1.344
billion Brazil 2.477
trillion 7th 2.7 Upper
middle
income developing 196.7
million India 1.872
trillion 10th 6.3 Lower
middle
income developing 1.241
billion Russia 1.857 11th 4.3 Upper
middle
income developing 143.0
million Indonesia 846.8
billion 15th 6.5 Lower
middle
income developing 242.3
million South Africa 408.2
billion 29th 3.1 Upper
middle
income developing 50.9
million Nigeria 244.0
billion 36th 7.4 Lower
middle
income developing 162.5
million Portugal 2.37.4
billion 42th 1.2 high income developed 10.56
million Bangladesh 111.9
billion 44th 6.7 Lower
middle
income developing 150.5
million Source: The World Bank Report: 2011.
While the above figure have shown relatively positive results for Nigeria, it is
also noticeable that Nigeria have to a larger extent started improving its
economic development.
3.1.1 Agriculture:
Nigeria has one of the highest prospects in the agricultural sector in the world.
It is home for plant, crop or animal productions. Before the discovery of oil in
1960s, agricultural sector accounted for more than 80% of Nigeria GDP. There
were mass production of rice, cocoa, sugar cane, corn, palm oil, groundnut
(pea nut), cassava, millet, rubber, sorghum, yams etc.
In the words of Okoroji (2011), since independence in 1960, agriculture has
been the mainstay of the Nigeria economy, accounting for over 63% of the
GDP The income from the Agric sector was mainly derived from exportation of
major cash crops like cashew nuts, peanuts, rubber, cocoa, palm oil, etc.
Okoroji, stated that during this period, Nigeria accounted for over 60% of the
global supply of palm oil, 35% of groundnut and 25% of cocoa. This helped
Nigeria realize its first economic potentials and laid the foundation for a
prosperous future.
However, with the discovery of petroleum, there was a shift of focus from the
agricultural sector to the oil sector, making Nigeria agricultural sector to suffer
a setback and neglect by both the government and the ordinary farmers. This
resulted in many negative effects as agricultural contributions to GDP
dramatically declined to 34% from 63% in 1980s World Bank (1986). Hence,
making Nigeria currently one of the world largest importers of basic food items.
Despite the drastic decline, currently, agricultural sector still accounts for 45%
GDP and employing about two-thirds of Nigeria`s total labour force and serves
as a source of livelihood for about 90% of the rural population in Nigeria.
Although experts still believes that the potentialities of Nigeria agricultural
sector is yet to be fully tapped, as stated by Okoroji (2011), even though the
overall GDP growth was 7.2 in 2010, the mining sector growth was 6.3%,
energy sector 4%, and 5.2% growth for service sector, agricultural sector has
been seen to be under performing as it is currently growing only at 1.5% in
2010.
However, there have been a lot of concerns by both governments and citizens
as regards the state of the agricultural sector in the country. The Nigerian
government has also come up with some initiatives to revive the agric sector.
Some of such initiatives are the Operation Feed the Nation, The Green
Revolution, and the numerous loans and subsidies been given to farmers to
assist them in purchasing farm implements and inputs. The most promising
among these initiatives is the present transformational agenda of the federal
government of Nigeria in Agriculture which have recorded tremendous success
in it attempt to revive the agric sector.
Hence, While there are many challenges facing the Nigeria Agricultural sector,
there are strong believe by many that huge potentials exist in the agricultural
sector in Nigeria, these are the supportive weather and climatic conditions, the
abundance fertile land mass for such agricultural activities and the presence of
cheap labour including the wide market to consume all the agricultural
produce in the country. Hence, all these factors when properly utilized can
revive the agric sector and thus helps in creating new jobs for the population,
increases financial freedom and power of the Nigeria citizens. Therefore, there
is no gain saying that the agricultural sector can help Nigeria become one of
the world leading economies, since if the system is repositioned and
modernized, many more investments opportunities will be created and more
income will be earned from the sector, increasing both the GDP and the
standard of living in Nigeria.
3.1.2 Natural Resources:
Nigeria is often referred to as one of the wealthiest country in Sub-Saharan
Africa due to huge natural resources deposit in the country.
As stated by CIA World Fact Book, Nigeria Mineral resources includes Natural
gas, petroleum, tin, iron ore, coal, limestone, salt, niobium, lead, Zink, arable
land etc. for instance, petroleum which is one of the major natural resources
accounts for over 14% of Nigeria total GDP and constituted 95% of the total
exports goods, The World Bank (2011). In the past, coal played a prominent
role in the development of Nigeria first economic initiatives during the pre
independent era and immediately after the independence in 1960 but was
neglected shortly after oil exploration began in the early 70s.
Apart from oil, other minerals like limestone and salt have both had
tremendous positive effect on the Nigeria economy as much revenue and
employment have been generated from the sectors since independence in
1960.
Although, Nigeria boost of having many natural resources, many of these
resources are yet or inadequately harnessed. For instance, many of the coal,
limestone, salt, iron ore and natural gas are not presently being utilized in ful
capacity. This is majorly due to the focus and dominance of the petroleum
sector.
The present heavy stocks of untapped minerals in Nigeria have prompted some
scholars to state that Nigerians are sitting on wealth but many do not know it,
Lyman (2004). This is because even though there are huge potentials in Nigeria
natural resources, little benefits are currently being drawn from then and even
the little that are tapped much of them are exported as raw materials or with
no value-added services.
However, since the return of democracy and with the recent transformational
agenda of the Federal Government of Nigeria, more institutions and practices
are been put in place to ensure adequate harnessing and utilization of all
natural resources in the country. Many believe, that Nigeria has huge
potentials by simply utilizing it resources well as more investments
opportunities abound in the sector. These opportunities no doubt are capable
of increasing both the GDP and the revenue income of both the Nigerian
citizens and the nation at large.
3.1.3: Manufacturing and Distributing Sector:
Prior to the emergence of the manufacturing industries in Nigeria, coal mining
and other extractive industries were the largest industries in Nigeria. The
advent of the oil industries, the Nigeria National petroleum Corporation began
its refining activities with other oil companies such as Shell BP, Mobil, Chevron
etc dominating the manufacturing and industries. Other industries also played
key roles during this period, like the cement companies and Breweries.
In recent time, the manufacturing sector of Nigeria economy has witnessed a
surge in the growth of the operating firms. Apart from electronics, many of the
household goods in Nigeria today are “made in Nigeria” Products. These
sectors do not only produce for the Nigeria market, but also for the entire
West African market. Hence, accounting for about 15% of the total GDP in
Nigeria World Bank Report (2011). Key players in the sector are the cement
industries, breweries, oil and gas companies, household goods companies,
sugar and food companies and some automobile companies. Many of these
companies have witnesses a surge in growth that some of them have reached
20 billion dollar capitalization in the Nigeria Stock Exchange.
Despite the rising increase in the manufacturing and distribution sector in
Nigeria, many challenges still abounds, such challenges as power,
infrastructures and credits remain major setback to many entrepreneurs.
However, many scholars see these challenges as opportunities that can easily
be turned into huge fortune by entrepreneurs. Hence, Victor (2009) argued
that the potentiality of the manufacturing sector in Nigeria is yet to be seen as
there are abundance natural resources as raw materials, cheap labours, large
land mass for factory construction, large market, low tax from government and
high growth potentials in the economy. Which no doubt, when fully developed
is capable of making Nigeria a global economic power.
3.1.4: Oil and Gas:
Although the oil and gas sector is part of the natural resources already
discussed, its important to the Nigerian Economy have necessitated the need
for this separate discussion. The oil and gas sector has been described as the
main stay of Nigeria economy by many scholars. Ordinarily, Nigeria relied on
agricultural exports to fuel her economy until the discovery of oil in the Niger
Delta region, specifically, in Oloibiri, the present Bayelsa state. However,
commercial production began in 1958 and since then there has been a total
shift from agricultural driven economy to oil and gas driven economy. For
instance, as of 2000, Obi (2005) reported that oil and gas was contributing
about 95% of export earnings and accounting for more than 80% of the federal
government revenue. He also stated that during this period, oil generated
more than 14% of the GDP and provided about 92% of foreign exchange
earnings and about 65% of government budgetary revenue to the Nigeria
government.
The U.S Energy Information Administration (2013), states that the current
proven oil reserve of Nigeria oil is estimated at about 22 billion barrels.
However, the Nigeria National Petroleum Plc put the figure at 35.3 billion
barrels. With this figure, Nigeria is judged to be the 10th
most petroleum rich
nation in the world and the most affluent in Africa. As of 2012, Nigeria crude
oil production stood at 2.2 million barrels per day. Apart from this, natural gas
reserves in Nigeria are well over 187 trillion ft over 3 times larger than the
crude deposit.
From the above discussion, it could be noticed that huge prospects exists in
the Nigeria oil and gas sector. This is because, as at the present, Nigeria still
import majority of its daily petrol and gas needs from other countries due to
lack of functional refineries. This is because, even though about five refineries
exist in Nigeria, most of them function below capacity and produce only about
450,000 barrels per day, while the Nigeria population consumes more than I
million barrels per day, (NNPC 2011). Hence, huge prospects abounds both in
the refining of petroleum and in liquefying of natural gas including the vast
potentials in the petrochemical industries.
3.1.5 Entertainment and Tourism
The Nigeria entertainment and tourism sector have become a very important
economic factor to the Nigeria Economy. As stated by UNESCO (2009) the
entertainment industry popularly known as the Nollywood which started in
less than two decades ago have grown to be the world second largest firm
industry in terms of the number of films produce per year after the Indian film
industry. The entertainment industry which took off in 1992 with the movie
“living in Bondage” by Kenneth Nnebue has assumed a considerable position
as it relate to the Nigerian economy.
Presently, the industry is the second largest single sector employer of labour,
employing about two million people and accounting for over 4% of the nations
GDP, UN (2009).
Although, major challenges are still being felt in the industry, such as piracy,
inadequate access to soft loans, lack of strong equipment and efficient and
globalized marketing platform. However, many believe that the potentialities
of the Nigeria movie industries is getting to be felt as there is hopeful
evidences that when fully developed, countless opportunities exist in the
sector.
The Nigeria tourism industry is another sector that is capable of enhancing
Nigeria`s quest for economic success. Currently the World Travel and Tourism
Council states that about 15 billion USD is earned by Nigeria in tourism related
activities. It further stated that the Nigeria Tourism sector accounted for about
6% of the GDP in 2007.
Although, tourism is yielding and still hold numerous potentials for Nigeria, the
Nigeria Tourism Development Corporation states that tourists sites in Nigeria
constitutes festivals, cultural celebrations, national parks and is currently been
faced by several challenges including infrastructures and absence of
entrepreneurs and investors in the sector. Hence there is no doubt that if
these two sectors are fully tapped, there are chances that limitless investment
opportunities will be created from both the entertainment and tourism
industries.
3.1.6 Telecommunications and the Social Media
Telecommunication and social media is another sector of the Nigeria economy
that deserves separate discussion. Although Nigeria is among the new arrivals
in both mobile phones and internet use, there has been high level of growth
that presently Nigeria is the leading country in both the number and
percentage of phone and internet use in Africa.
Apart from this, television and radio stations are also among the biggest actors
in the Nigeria economy. For instance, some of them have started listing in the
Nigeria stock exchange. From their main functions, both the telecomm and the
media companies have added much value to the Nigeria economy and over
one million jobs have been created by the sector which according to the
Nigeria Communication Commission (NCC), these sectors accounted for more
than 2.5% of the total GDP of Nigeria.
From all indication, telecommunication and social media has strong influence
on the Nigeria economy and is still believed that these sectors will continue to
have strong influence in the Nigeria economy because telecoms and the media
that stands to shape and determine the future of every economy.
Hence, many opportunities abound in these sectors as more strong and vibrant
telecommunications network and enhanced social media is needed to drive
the fast growing Nigeria economy.
3.2. Demography
Nigeria is the most populous country in Africa and the world`s seventh. It
account for almost 20% of the total African population and have had an
unprecedented population explosion since 1990. Rising by more than 67
millions, which is averaging 70% growth UN MDG report (2012). It further
states that Nigeria population in 2009 was 167 millions, distributed as 51.7%
rural and 48.3% urban with a population density of 167.7 people per square
kilometres. Presently, a 2013 report by the CIA stated that Nigeria population
is currently 170 million. This was also supported by the U.S library of congress
report which states that; Out of this figure, 43.2% are between the age of 0-14
years while 54.6 are within the age of 15-65, only 2.2% are above 65 years. The
birth rate is very much higher than the death rate, at 40.4 and 16.9 per 1000
respectively.
By a UN projection (2013), Nigeria is currently among the countries with the
highest growth and fertility rates in the world. It is among the eight countries
that will be accounting for half of the world total population in 2050. From this
discussion above, one would agree with me that Nigeria has the needed
manpower and cheap labour force to derive any developmental agenda.
3.4 Democracy, Government and Politics
Nigeria has gone through various forms of government, during the
independence in the 1960s, it was a parliamentary system but was later
changed in the 1975 to the current presidential system after the civil wars and
military rules. In this current system, the president is both the head of state
and that of government and commander-in-chief all armed forces. There is a
bicameral legislature, comprising of the House of Senate and House of
Representatives.
Ordinarily, democratization process returned to Nigeria in 1999 when
President Olusegun Obasanjo was elected as the president of Nigeria ending
the 33 years of military rule (from 1966-1999) with the exception of the short
lived-lived second republic between 1979-1983. During this period, there were
series of military coup-detat starting from 1966-1979 and 1983-1999. Apart
from these, there were also several ethno-religious conflicts and social
violence which all combined to not only handicapped the democratization
process in Nigeria, but also to down play the growth of the Nigeria economy.
Notable amongst these crises were the Niger-Delta crises, the ethno-religious
conflicts in Kano, Kaduna, Maiduguri, Jos, etc.
After the return to democracy in 1999, Nigeria has since had four elections
which have seen significance improvement from 1999 to 2011. Though,
irregularities and corruption still pose some challenges, efforts are been
intensified to ensure that that Nigeria achieve free and fair elections in a near
future.
With the stabilization, Nigeria political situation have taken into accounts, the
need to restructure the polity and makes it friendlier for economic
development and progress. This course has been pursued by both the previous
and present regime and numerous policies capable of bringing transformation
and economic progress to Nigeria. Hence, it is interesting to know that apart
from the abundance mineral resources, cheap labour, large and fertile land for
agriculture and large land mass factory site, the government is also providing
an enabling environment for economic advancement with the objective of
making Nigeria an economically strong nation within the shortest possible time.
3.5 Education
The Nigerian government provides free education from primary to the junior
secondary (Junior high school) level. The system of education in Nigeria is
classified as 6-3-3-4 which means 6 years of primary school, three years of
junior secondary school, three years of senior secondary school (high school)
and four years of University. Currently, Nigeria has about 171 million people
out of this figure over 50 million of them are student and as stated by the
World Education Service, report that 97 percent of the Nigeria children access
primary education while about 67% have access to tertiary education in 2009.
However, there has been growing rate of the percentage of people accessing
university education in Nigeria, as more and more universities are been
established. As of 2013, Nigeria have over 118 universities; 37 federal, 36 state
and 45 private universities. And over 200 tertiary institutions such as
Polytechnics, collages of education, collage of agriculture etc. However, this
number is still very minimal compared to the population. But on the whole, it
has led to the increasing number of graduate seeking employment in the
country today.
As seen, there are many opportunities in the Nigeria educational sector as
regards building of schools, and manufacturing of educational equipment
which when developed and will help in providing the needed and quality
manpower for the Nigeria economic development.
Chapter Four:
Challenges Facing the Nigeria economy
There are many challenges facing the Nigerian economy despite the recent
economic progress witnessed in the country today. Going by the enormous
natural resources endowment in Nigeria, many believes that the economy
should have performed better than it current status. I will look at these
problems on the following divides;
4.1 Economic Challenges
For sometimes now, Nigeria have faced increasingly economic challenges in
almost all sectors of the economy. This is basically due to some fundamental
issues such as lack of basic infrastructural facilities and technological
capabilities, World Bank (2012). Such as power, efficient, transport system,
lack of support for small scale industries and start up companies etc.
Obviously, there are factors that limited economic success in Nigeria, one of
such factors is infrastructure. For instance, in Nigeria today, power failure has
become a challenge to both private and business enterprise to the extent that
many are depending on private generating plant to power their activities. This
situation has not only increased the cost of doing business in Nigeria, but has
made some to fold up. A situation that has slows down the pace of economic
growth in Nigeria.
Another basic factor constituting part of the economic challenges in Nigeria is
the non existence of efficient transport system. The Nigeria transport system
has been depending on the road transport for sometimes now. This has led to
the neglect of the rail transport, subways, inland water ways and other means
of transportation. The effect of this has led to over dependent on the road
network and continuously weakens the capacity of road networks to function
at optimum level. Hence congestions, hold ups and road accident have become
rampant and increasingly put danger on road use in Nigeria.
Other factors within this cycle which have attracted attentions as factors
militating against the Nigeria economy is lack of access to credits and soft loans
by small scale industrialists and start-up companies. The high level of poverty
in Nigeria have made many person with genuine business ideas not to
participate in the business activities due to their inability to access loans from
banks and other financial institutions. Even those that manage to secure some
loans are easily forced to shut down their business when they fail to meet up
cost due to high cost of electricity, difficulties in road use and their inability to
secure more loans to compliment their cost.
In addition to the above, issues such as the absence of strong technological
capabilities necessary to fuel economic development. For instance, in Nigeria
today, there are no strong steel and other technological based companies that
are the engines of modern day development in many countries.
4.2 challenges facing the Agriculture and Natural resources
Over the past forty years, agriculture have been neglected and relegated to the
background in Nigeria. This relegation no doubt has created a system easily
described as a mono economy depending solely on oil in Nigeria. The decline in
Agricultural sector has generated several challenging effects and needs urgent
intervention in a way that will adequately address the current problems facing
the sector. Problems such as lack of adequate soft loans and subsidies to
farmers, land tenure system and the increasing effects of climate change that
have been on increase in recent years have put the agric sector in jeopardy and
can only be addressed if serious attention is paid to the sector.
On the other hand, many challenges also face the mineral sector. Difference
but complicated factor combined to affects the sector negatively. Prominent
among these factors are the oil theft and lack of capacity to fully develop the
mineral sectors. Hence a great task before the Nigeria government is finding
solutions to the problem of pipe line vandalism, illegal mining or refining and
eliminating the institutionalized corruption in the petroleum sector which have
been basic problems facing the Nigeria economy.
4.3 Government and democratic Challenges
Since independence in 1960, political instabilities and bad governance have
been central point militating against the success of the Nigeria economy. From
1955, social violence and political unrest including a great deal of ethno-
religious conflicts, the 3 years civil war and the various coup d’état have for a
long time slows down not only effective governance functions but also badly
affected the economic system. For instance, many lives and property are
constantly lost to violence conflict in mostly the northern parts of the country
and the Niger Delta.
Another basic factor within this circle which has also been greatly affecting the
Nigeria economy is bad governance. Ezugwu (2013), states that the Nigeria
government have for a long time allowed corruption, and non implementation
of policies to greatly affect its economy negatively. Many past and present
leaders have in so many ways diverted fund meant for public works into their
private accounts leading to policy abandonment and failure of policies that are
intended to affect both lives and the entire economy.
4.4 Educational Challenges:
Currently Nigeria strongly faces a lot of educational challenges ranging from
inadequate number of universities to non existence of many well functional
research laboratories and inadequate infrastructures in various schools across
the country. This situation no doubt has major effects on the Nigeria economy
in general.
This has resulted in many Nigerians not been able to access university
education, a heavy dependent on the available school and the increasing
inability of the universities to adequately carry out research that will support
economic growth.
Chapter five:
Summary, Recommendations, Forecasts and Conclusion
5.1 Summary
So far, we have discussed the issues constituting the major topics in the Nigeria
economy and political scenes. Prominent among these issues is the
understanding that the Nigeria economic and political sphere has been
characterised by violence, corruption, and mismanagement including political,
social cum ethno-religious conflicts until the recent improvement which
started gaining popular awareness from 1999 after the return to civil rule.
Current situation of both the political and economic situation in Nigeria show
significance improvement despite severe challenges and over dependent on
the petroleum sector. It is shown that shown that the economy is growing
rapidly at an average of 7.5 with massive expansion of the industrial and
service sectors. The political situation have also witnessed significance
improvement with the 2011 general election receiving massive
acknowledgement as the best and most free and fair election in the history of
Nigeria.
Major sectors of the economy with high potentials that are believe to witness
overwhelming growth are the natural resources sector, which is believed to be
of higher impacts if fully developed, the Agricultural sector which currently
provides more than 50% of the total employment in Nigeria is said to
champion some developmental objectives if much government effort are put
in place to provide subsidies and loans t farmers. The manufacturing sector is
also seen to be highly growing to the extent that some have reached 20 billion
dollar capitalization in the Nigeria stock exchange and more and more
industries would be established if power is restored and loans given to
emerging entrepreneurs. Other sectors with high growth potentials are the
entertainment sector and the telecommunication sectors which have had
unprecedented growth in recent years. For instance, Nollywood which is a
subsector of the entertainment sector have grown to become the world
second largest film industry.
The demographic situation of Nigeria is also worth noticing as Nigeria
population have had what is better described as population explosion with a
current figure of about 170 million persons and estimated to be among the
eight nations with half of the world populations in the future. The educational
sector is also growing with abundance opportunities for growth.
Several challenges were mentioned as facing the Nigeria economic and
political environment. Basic and most prominent among these challenges
facing the economic sector in particular is the infrastructural inadequacy
especially the epileptic power supply and bad transport network which have
negatively affected the countries overall development efforts. Other
challenges are lack of loans and subsidies for small and medium scale
enterprises and farmers, corruption and political cum social violence. These
factors are said to have constituted major setback to the development of the
Nigeria economy and democratic development.
5.2 Recommendations:
Based on the challenges discussed on the Nigerian economic and political
sphere, the following recommendations are made as suggestions on how to
improve both the economic and political institutions in Nigeria.
On the economy, the following recommendations are made:
• Maximum focus should be placed on developing infrastructures. With
huge attention on restoring the power sector and transport networks
through public- private sector driven initiatives and partnership that will
bring about transformation in the sector.
• Apart from developing infrastructure, credits facilities and access loans
should be given to small and medium size investors to boost their access
into the economy.
• There should also be a total over haul and transformation of the agric
sector with adequate loans and subsidies made available directly to the
farmers.
• Much attention should also be focused on the energy sector. The Joint
Task Force and vigilante services should be instituted to safe guard the
pipe line from illegal vandalism and theft. And
• Efforts should be focused on eliminating the institutional corruption in
the oil sector to ensure transparency.
In Government and Democratic institutions,
• First, much attention should be focused on curbing the incessant
political violence through the strengthening of political institutions
and the rule of law.
• Bad governance should be discouraged through the open and
transparent elections and punishment of corrupt leaders.
• Ethnic and social unrest including conflicts should be minimized
through building of a free society, where individuals` right are
respected based on the rule of law.
As regards Education,
• More universities should be established by both government and
private individuals.
• Research laboratories should be upgraded and furnished to a well
deserving standard.
• Infrastructures and learning environment in other existing
universities should be re-equipped and renovated to meet modern
standard.
5.3 Forecasts
Based on the above recommendation, the following projections are
made:
• Nigeria`s GDP is expected to have grown to more than 500 billion
dollars from its current 248 billion dollars.
• Low income jobs are expected to rise and outnumbered the
number of unemployed youths due to the creation of several
small scale industries from credits and loans empowered by
government.
• Power and infrastructure are expected to have improved up to
75% due to the entrance of private sector and entrepreneurs in
the sector.
• There would be massive improvement in the Agricultural sector.
Nigeria will again be self sufficient in the production of some
agricultural produce and its impact on national revenue will
improve to at least 25%.
• Due to improve in power supply and other infrastructures, more
and more industries will be established and others will witness
unprecedented growth.
• There will be gradual shift from mono economy to a diversified
economy with a lot of transformation in production process and
service delivery systems from mere traditional method to a
technological based system.
• Oil theft and illegal refining will be greatly minimized due to
reduction in youth’s unemployment with increasing security
improvement.
• As entrepreneurs enter into the educational system, more and
more universities will be created and existing ones upgraded due
to competition in the sector.
• Politics and democratic institutions will be further strengthened
due to transparency in the legal codes and emphasis on the rule of
law and respect to human rights. And ultimately,
• Nigeria will be joining the world top 20 economies which will go a
long way in showcasing it efforts and ensuring that its progress is
very much enhanced.
5.4 Conclusion
So far, we have looked at the major issues as regards Nigeria economic and
political sphere, examining its prospects for economic and political
transformation and challenges currently faced. It is evidenced from the
discussion that the Nigeria`s potential for becoming a global economic and
political power is assured although with varying challenges. Hence the point
remains that all possible positive actions must be taken especially as
recommended above to ensure the transformation of Nigeria from being a
poor country to a rich one where all the needs and aspirations of the people
are achievable.
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