Nigeria, a vibrant nation in West Africa, boasts of vast natural resources and a diverse population of over 200 million. Despite this potential, the country remains classified as a Less Developed Country (LDC) grappling with significant challenges in economic growth, poverty reduction, and human development. Understanding the root causes of these challenges is critical for charting a path towards sustainable development. Going further, we discuss how institutional factors have acted as major bottlenecks impeding Nigeria’s progress, both in the pre- and post-independence eras. Nigeria’s planning journey reveals a checkered history, marked by ambitious aspirations and unfulfilled promises. Pre-independence, British colonial rule established rudimentary development plans focused on resource extraction and maintaining control. Post-independence, various national development plans have been formulated, including the First National Development Plan (1962-1968) and the Vision 20:2020 initiative. While these plans envisioned a thriving nation, their implementation faltered due to the pervasive influence of institutional vulnerabilities.
Review of Nigeria’s Development Planning
Nigeria’s planning experience began with the Ten-Year Plan of Development and Welfare for Nigeria which was introduced in 1946 by the colonial government (1945-1956). Development plans in this period was a brainchild of the colonial administration, highly dependent on the British economy. Another plan existed from 1955–1960 as a result of the visit and advice of the World Bank in 1954.
These plans that existed before independence failed due to the following reasons:
- No properly defined objectives useful to Nigerians
- Failed to satisfy the fundamental requirement of good planning by not involving Nigerians in its conception, formulation, and implementation.
- Planning exercise and implementation were hindered by insufficient data and inadequate administrative personnel. Only few people were educated at that time.
- No efforts were made at coordination and integration of the regional plans with the federal plans.
It is equally argued that the plans did not have definite objectives relevant to the country’s needs, even as the machinery for implementation was lacking (Ojo, 2012). In spite of these obvious weaknesses, the fact still remains that it was the colonial development plans that laid the foundation for Nigeria’s future economic development planning (Iwuagwu, 2020)
Post-Independence Planning Up to 1985
Nigeria kickstarted its post-independence development planning in 1962, with the introduction of the 1st National Development Plan (1962 – 1968). This plan had a total investment expenditure of N2, 132 million, comprising N1, 352.3 million from the public sector and N780 million from the private sector. It also set a target growth rate of 4% per annum for the economy. The plan targeted strategic developments in agriculture, manpower, industry and transportation. It also aimed to achieve and maintain the highest possible rate of increase in the standard of living of the people, with a targeted saving of about 15% of the GDP by 1975 and an annual investment of 15% of the GDP within the period. The implementation of this plan was however affected by the outbreak of the Nigerian Civil War in 1967 as government efforts were diverted to prosecuting the war. However, available evidence indicate that the first National development plan accomplished a number projects including the building of the Port Harcourt Oil Refinery; Paper Mill, Sugar Mill and the Niger Dam (in Jebba and Bacita respectively); construction of the Niger Bridge; Ports’ extension projects; as well as the construction of a number of “Trunk A” roads. It was also in this period that the country’s first- generation Universities: The University of Ibadan and the University of Lagos (both owned by the Federal Government), Ahmadu Bello University (Northern Region), University of Nigeria, Nsukka (Eastern Region) and the University of Ife, now Obafemi Awolowo University (Western Region) were established. These significant developments were possible because, the annual capital budget was operated within the development plan framework. They were thus employed as the main instrument of control and allocation of development resources and this was made possible by the existence of a development plan, which provided guidelines for meaningful and co-coordinated development during the plan period despite the political crises (Bashiru et al, 2006).
The 2nd National Development Plan (1970 – 1974), which is regarded by many as the ‘oil boom plan’ considering that it was in this period that Nigeria recorded its first significant boom in price from its crude oil resources. Considering that this plan was essentially a post-war plan, its focus was therefore on the reconstruction of the war-battered economy as well as the promotion of economic and social development in the new Nigeria (Iwuagwu, 2020). Specifically, the objectives of the Plan included among others: the reconstruction of facilities damaged by the war or fallen in despair; rehabilitation and resettlement of persons displaced by the war and demobilized armed forces personnel; establishment of an efficient administrative service, and an appropriate economic infrastructure, especially in the new states; and, rapid improvement in the level and quality of social services provided for the welfare of the people (Jibietan & Ekhosuehi, 2013). All these were encapsulated in the general principles of the plan, which included the building of a united, strong and self-reliant nation; great and dynamic economy; just and egalitarian society; a land of bright and full opportunities for all citizens; and, a free and democratic society.
The Third National Development Plan (1975:1980): The Third National Development Plan had a projected jumbo investment of N30 billion which was later increased to N43.3 billion. This represented ten times that of the Second Plan and about 15 times that of the First Plan (Obi, 2006). The objectives of the plan were: increase in per capita income; more even distribution of income; reduction in the level of unemployment; increase in the supply of higher level manpower; diversification of the economy; balanced development and indigenization of economic activities (Obi, 2006). The approach of the plan was to utilize resources from oil to develop the productive capacity of the economy and thereby permanently improve the standard of living of the people. Therefore, the plan was premised on the need for the public factor to provide facilities for the poorer sections of the population including electrification, water supplies, health services, urban housing and education (Egonmwan and Ibodje, 2001).
The assessment of the plan showed it focused to give priority to projects and programmes that would directly impact positively on the rural dwellers, but the meagre allocations to agriculture and social development schemes did not indicate sincere intention of the government to achieve the objective. According to Okigbo (1989) agriculture and social development scheme (education, housing, health, welfare etc) that have direct bearing on the living conditions of the rural population received only 5 per cent and 11.5 per cent respectively of the financial allocations contained in the plan. It is appropriate to state here that the meagre allocation to agriculture and social development schemes, which were priority areas, indicated the “lack of focus of the planners to careful sifting of the criteria for allotting principles” (Onah, 2010). In this context, nobody should expect the plan to achieve the desired objective. Like other plans before it, the third plan did not really achieve its set targets. Irrespective of the inadequacies of this plan, it witnessed achievements in some areas. In the opinion of Okowa (1991), “in terms of achievement, the manufacturing sector recorded the fastest growth rate with an average of 18.1 per cent per annum. Some other sectors that witnessed growth were building and construction and government services.
Fourth National Development Plan (1981-1935): The Fourth National Development Plan (1981-85) came on board in 1981. It was the first that the civilian government prepared since the intervention of the military in Nigerian politics in 1966. The objectives of the plan according to Obi (2006) were: (i) increase in the real income of the average citizen; (ii) more even distribution of income among individuals and socio-economic groups (iii) reduction in the level of unemployment and under employment; (iv) increase in the supply of skilled manpower; (v) reduction of the dependence of the economy on the narrow range of activities; (vi) increased participation by the citizens in the ownership and management of productive enterprises; (vii) greater self reliance that is, increased dependence on local resources in seeking to achieve the various objectives of society; (viii) development of technology; (ix) increased productivity and (x) the promotion of a new national orientation conducive to greater discipline, better attitude to work and cleaner environment. The projected capital investment of the plan was put at N82billion. Out of this figure, the public sector investment was N70.5 billion while the private sector was expected to invest N11.7 billion (Obi, 2006). According to Adedeji (1989) the plan was “the largest and most ambitious programme of investment over launched in Nigeria”. The plan also adopted as its main strategy the use of resources generated from oil to ensure all-round expansion in production capacity of the economy and to lay a foundation for self sustaining growth (Egonmwam and Ibodje, 2001). It was anticipated in the Fourth Plan that exports led by petroleum products would generate enough funds to actualize the plan that had been formulated. Eventually, the revenue realized from exports were far below anticipated projections. It is a sad commentary that only 54 per cent of the export proceeds projected for the period were realized in 1984. For instance, it was projected that N79.449 million would be earned from petroleum exports between 1980 and 1984, but only N52.78 million some 66.4 per cent of the projected figure was earned (Okigbo, 1989).
With the dwindling resources to finance the Fourth Plan, the Nigerian economy witnessed debt service and balance of payment problem coupled with high level of inflation. Most of the projects that were started at the beginning of the plan period could not be completed and these together with several spillover projects from previous plan had to be abandoned (Jaja, 2000). The growth rate of Gross Domestic Product (GDP) per annum was only 1.25 percent compared to 5.5, 13.2 and 4.6 percent under the previous National Development plans (Onah, 2010). Another problem of this plan was rise in the cost of living that led to a reduction in the standard of living of a common man. There was also phenomenal increase in unemployment among school leavers in the country. Our external reserves kept on declining. Commenting on the plan, Alapiki (2009) observed that “the plan period 1981-85 proved to be the most dismal in the economic history of Nigeria at that time”. The Fourth National Development Plan recorded some achievements in some areas in spite of its drawbacks. The implementation of Agricultural Development Programme (ADP) in most states was successfully completed, the commissioning of Egbim Power Station, Dry Dock Project at snake Island, Lagos and the 87 telephone exchanges located all over the federation which increased the number subscribers to telephone lines from 188,000 in 1981 to 297,000 in 1985 (Egonmwan and Ibodje, 2001).
The Fifth National Development Plan: Due to poor implementation of the Fourth National Development Plan, a machinery was put in place for preparation of the Fifth National Development Plan. In order to facilitate the exercise, a conference was held at the University of Ibadan in November 1984 to deliberate on the appropriate mechanisms for the Fifth National Development Plan. The conference suggested some measures which formed the corner stone of the policies and strategies incorporated in the Fifth National Development Plan. The objectives of the Fifth National Development Plan were: (i) diversification of the nation’s economy away from the mono cultural one to which it has been pushed by the fortunes of the oil sector; (ii) revitalization of the agricultural sector with a view to achieving thorough integrated rural development programmes; (iii) domestic production of raw materials for local industries in order to reduce the importation of locally manufactured goods and (iv) promotion of employment opportunities in order to arrest the deteriorating mass unemployment (Onyenwigwe, 2009). The primary focus of the plan was to correct the structural defects in the economy and create a more self-reliant economy that would largely be regulated by market forces (Iheanacho, 2014) The economy was therefore expected to be restructured in favour of the production sector especially those of agriculture and manufacturing (Onyenwigwe, 2009). More than ever; the linkage between the agricultural and manufacturing sectors of the economy were to be emphasized during the plan (Ayo, 1988). The Fifth National Development Plan did not materialize. It was later incorporated in the Structural Adjustment Programme (SAP). The two year SAP brought to an end the five year planning model in Nigeria. The Federal government changed the two year model to three year rolling plans.
Structural Adjustment Programme (SAP)
Following the change of government in 1985, which resulted from yet another military coup, General Ibrahim Babangida became the country’s Head of State. The period was characterized by deplorable state of the economy, as indicated by a general fall in revenue sources, weak currency, high interest rates and huge external debt. Hence, the challenge of government now shifted to how to tackle these issues on a sustainable basis. It was to address these issues that the Structural Adjustment Programme (SAP) was introduced in September 1986. SAP was originally planned to cover the period 1986 – 1988, but it was later extended to provide the basis for the successive 3-year National Rolling Plans, which the country adopted from 1990. The aim of SAP was to restructure and diversify the productive base of Nigeria’s economy especially to reduce over dependence on the oil sector and on imports; achieve fiscal and balance of payments viability over the period; lay the basis for sustainable non-inflationary growth; and, reduce the dominance of unproductive investments in the public sector by improving public sector efficiency and enhance the growth potential of the private sector. Government’s implementation of SAP of course, signified a change in the country’s conventional planning model. This was as a result of the huge short fall in expected earnings from oil, which adversely affected the performance of the 1981 – 1985 development plan. It therefore became evident that the country could no longer rely on the fixed term 5-year plans given that the economy had become subject to the vagaries of the international oil market (Ukah, 2007). SAP was anchored on several pillars among which were: deregulation of the value of the naira, which was then believed to be over-valued; deregulation of interest rate, which at SAP’s inception was below 10 percent; and, removal of subsidies on government-provided goods and services.
A review of the implementation of SAP in Nigeria showed that initially, the programme seemed to have achieved its goals as efforts were made to eliminate the corrupt import licensing system, which almost crippled the manufacturing sector to a reduced performance of 25%. This aside, government’s initial efforts stimulated some rise in industrial production, even as the period witnessed minimal starts in the exportation of agricultural produce (Jibietan & Ekhosuehi, 2013). However, over time, things took a turn for the worse beginning with the currency, which took a major plunge. From a parity of one Dollar to one Naira in early 1986, the currency crashed to N9.50k to one dollar in March 1992, further depreciating by almost 100 percent to N18.60k to the dollar later that year. In fact, by early 1993, a dollar was trading at N43.00 in the parallel market. Furthermore, with the deregulation of interest rates, a regime of high interest rates was ushered into the economy, grossly affecting the sourcing of loans and in fact doing business in general especially with financial institutions. Overtime, manufacturing and other sectors could not survive, the economy also began to wobble even as unemployment and poverty rates increased (Jibietan & Ekhosuehi, 2013).