Nigeria - Chapter 3. The Economy

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A MAJOR FEATURE of Nigeria's economy in the 1980s, as in the 1970s, was its dependence on petroleum, which accounted for 87 percent of export receipts and 77 percent of the federal government's current revenue in 1988. Falling oil output and prices contributed to another noteworthy aspect of the economy in the 1980s--the decline in per capita real gross national product (GNP--see Glossary), which persisted until oil prices began to rise in 1990. Indeed, GNP per capita per year decreased 4.8 percent from 1980 to 1987, which led in 1989 to Nigeria's classification by the World Bank (see Glossary) as a low-income country (based on 1987 data) for the first time since the annual World Development Report was instituted in 1978. In 1989 the World Bank also declared Nigeria poor enough to be eligible (along with countries such as Bangladesh, Ethiopia, Chad, and Mali) for concessional aid from an affiliate, the International Development Association (IDA).

Another relevant feature of the Nigerian economy was a series of abrupt changes in the government's share of expenditures. As a percentage of gross domestic product (GDP--see Glossary), national government expenditures rose from 9 percent in 1962 to 44 percent in 1979, but fell to 17 percent in 1988. In the aftermath of the 1967-70 civil war, Nigeria's government became more centralized. The oil boom of the 1970s provided the tax revenue to strengthen the central government further. Expansion of the government's share of the economy did little to enhance its political and administrative capacity, but did increase incomes and the number of jobs that the governing elites could distribute to their clients.

The economic collapse in the late 1970s and early 1980s contributed to substantial discontent and conflict between ethnic communities and nationalities, adding to the political pressure to expel more than 2 million illegal workers (mostly from Ghana, Niger, Cameroon, and Chad) in early 1983 and May 1985.

The lower spending of the 1980s was partly the result of the structural adjustment program (SAP) in effect from 1986 to 1990, first mooted by the International Monetary Fund (IMF--see Glossary) and carried out under the auspices of the World Bank, which emphasized privatization, market prices, and reduced government expenditures. This program was based on the principle that, as GDP per capita falls, people demand relatively fewer social goods (produced in the government sector) and relatively more private goods, which tend to be essential items such as food, clothing, and shelter.

Data as of June 1991


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