CAPITAL ACCUMULATION AND ECONOMIC TRANSFORMATION
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CAPITAL ACCUMULATION AND ECONOMIC TRANSFORMATION
Chapter one
1.1 Introduction
The good economic performers of the 1960s, 1970s, and early 1980s in Africa were almost all disappointments, owing in large measure to increasing inefficiencies that stifled development and investment.
On the contrary, the recent improvement in economic performance in several African countries has been fueled by the removal of market distortions and, to a lesser extent, structural change, with no significant progress in terms of higher investment rates (see, for example, Fischer, Hernandez-Cats, and Khan, 1998).
Nigeria has been a country of paradoxes. It is a country rich in natural and human resources, but its potential was largely unexplored and even mishandled during its first four decades of independence.
Nigeria is Africa’s largest country, with an estimated 140 million people, and accounts for one-sixth of the world’s black population. Nigeria is the world’s eighth largest oil producer and sixth-largest natural gas reserve.
Currently, just 40 percent of arable land is under cultivation. With over 100 postsecondary schools producing over 200,000 graduates each year, the basic human resource for success is present.
There are several solid mineral reserves that are mostly unexplored. It is estimated that over 5 million Nigerians live outside of Nigeria, with tens of thousands working as world-class doctors and other professionals.
In the midst of these resources, Nigeria (on average) languished until 1999. The poor condition grew regularly, and by 1999, the poverty rate was projected to be 70%.
A classic method of highlighting the breadth of our tragedy is to compare Nigeria to Indonesia and even Malaysia. By 1972, before Nigeria and Indonesia had their first oil boom, both countries were identical in practically every way: agrarian societies, multi-ethnic and religious communities, GDPs of comparable size, etc.
Both had an oil boom in 1973 and subsequently, but pursued distinct policy options. As a result of policy regime disparities, today, whereas manufacturing exports account for around 40% of total exports in Indonesia, they account for less than 1% in Nigeria, where we were in the 1970s.
We hear how Malaysia obtained its first palm seedlings from Nigeria in the early 1960s, when oil palm production was already a substantial export for Nigeria.
In the 1990s, Malaysia’s palm oil exports were considered to be more profitable than Nigeria’s oil exports, and Nigeria had become a net importer of palm oil.
In economic terms, the 1990s saw an average GDP growth rate of 2.8 percent, which was roughly the same rate as population increase (2.83 percent). This indicates that there was no per capita growth during the 1990s decade, therefore it’s no surprise that poverty rates increased to 70%.
All fundamental infrastructure was in disarray, with only 1700MW of electricity produced for a country that required at least 40,000. It goes without saying that the outdated transport infrastructure and the embryonic, yet weak, financial system were unsuitable for the needs of socioeconomic revolution.
The economy was characterised by both unemployment and poverty. Real wages had been falling dramatically since the 1970s, until wage rises in 2000 began to reverse the trend but have yet to return to mid-1970s levels in real terms.
Nigeria has had decades of stagnant growth and has been one of the world’s slowest growing economies on a per capita basis over the previous 30 years, while earning over $300 billion in oil exports.
For numerous years, Nigeria’s development challenge was to diversify its production base away from oil. Successive administrations took up this issue by designing and implementing a variety of programmes and strategies.
However, attempts to accelerate industrial sector growth resulted in investment in a number of projects that proved to be “white elephants”.
During 2003-7, Nigeria attempted to execute an economic reform programme known as the National Economic Empowerment Development Strategy (NEEDS).
NEEDS aims to increase the country’s standard of living by a series of reforms, including macroeconomic stability, deregulation, liberalisation, privatisation, transparency, and accountability. The State Economic Empowerment Development Strategy (SEEDS) is a related state-level project.
The United Nations (UN)-sponsored National Millennium Goals for Nigeria represent a longer-term economic development programme.
Nigeria is dedicated to achieving a wide range of ambitious objectives under the programme, which runs from 2000 to 2015. These include poverty reduction, education, gender equality, health, the environment, and international development cooperation.
In a 2004 update, the UN discovered that Nigeria was making progress towards some targets but falling short of others.
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