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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