ECO 146 Nigerian Economy in Perspective Course Guide PDF

NATIONAL OPEN UNIVERSITY OF NIGERIA SCHOOL OF ARTS AND SOCIAL SCIENCE COURSE CODE: ECO 146 COURSE TITLE: NIGERIAN ECONOMY IN PERSPECTIVE 1 NATIONAL OPEN UNIVERSITY OF NIGERIA Nigerian Economy in Perspective ECO 146 SCHOOL OF ARTS AND SOCIAL SCIENCES COURSE GUIDE Course Developer: Ayanwale Abiodun Olayinka Samsideen Department of Agricultural Economics/Post graduate School University of Ibadan COURSE EDITOR Dr. Ayila Ngustar 2 CONTENTS PAGES Introduction 2 Course Aims 2 Course Objectives 2 Course Materials 3 Study Units 3 Textbooks and References 5 Assignments 5 Tutor-Mark Assignment (TMAs) 5 Final Examination and Grading 5 Course Marking Scheme 6 Presentation Schedule 6 Course Overview 6 How to Get the Most from this Course 8 Facilitators/Tutor and Tutorials 10 Summary 10 Introduction Welcome to ECO 146: NIGERIAN ECONOMY IN PERSPECTIVE 1 ECO 146: Nigerian Economy in Perspective 1 is a three-credit and one-semester undergraduate course. It comprises of 20 units subdivided into five modules. This course guide gives an overview of the course. It offers you with the necessary information on the organisation as well as requirements of the course. 3 Course Aims a) to provide a background to the student on the concepts of structure of an economy b) to equip the students with an understanding of the overall profile of the Nigerian economy c) to familiarize the students with the activities of agricultural and industrial sectors and subsector of the Nigerian economy d) to appraise some government plans, policies and programmes as it affects the overall structure and different sectors of the economy Course Objectives To achieve the aims of this course, there are overall objectives which the course is out to achieve, though, there are set out objectives for each unit. This is to assist the students in accomplishing the tasks entailed in this course. The objectives serves as study guides, such that student could know if he is able to grab the knowledge of each unit through the sets of objectives in each one. At the end of the course period, the students are expected to be able to:  Explain the basic concepts of economic structure and systems  Outline the features and profile the Nigerian economy before and after independence  Discuss the evolution, structure and contribution of agricultural and industrial sectors to economic development before and after independence in Nigeria  Appraise the challenges and prospects of the agricultural and industrial sector in Nigeria  Evaluate the effectiveness of some Nigerian government plans, policies and programmes to economic structure and development Course Materials Main materials required to go through this course are: a. course guide b. study units 4 c. assignment file d. reference of textbooks listed under each unit e. presentation schedule Study Units There are 20 units (grouped under five modules) in this course stated as follows: ECO 146: NIGERIAN ECONOMY IN PERSPECTIVE CONTENTS Module 1 Understanding Nigerian Economic Structure and System Unit 1 Concept of Economic Structure Unit 2 Concept of Economic System and Structural Dualism Unit 3 Profile of the Nigerian Economy Unit 4 Overview of the Nigerian Economy Module 2 The Nigerian Agricultural sector Unit 1 The Characteristics and Importance of the Nigerian Agricultural Sector Unit 2 The Agricultural Sector during Pre-independence and Post- Independence Period Unit 3 The Challenges and Prospects of the Nigerian Agricultural Sector Unit 4 Policy Intervention in the Nigerian Agricultural Sector Module 3 The Nigerian Industrial Sector 1- General Overview; Manufacturing Subsector Unit 1 Concepts and Importance of the Industrial Sector Unit 2 The Manufacturing Subsector during Pre-Independence and Post- Independence Period 5 Unit 3 The Challenges and Prospects the Industrial Sector in Nigeria Module 4 The Nigerian Industrial Sector 2- Mining and Quarrying Subsector Unit1 The Characteristics and Importance of Mining Unit2 The Crude Oil Industry Unit 3 The Solid Minerals and Associated Natural Gas Industry Unit 4 The Challenges and Prospects of the Mining Subsector Module 5 Economic Plans, Policies and Programmes 1 Unit 1 Development Planning in Nigeria (1st- 4th plans) Unit 2 Indigenisation Policy Unit 3 Structural Adjustment Programmme (SAP) Unit 4 National Economic Empowerment and Development Strategy (NEEDS) Unit 5 National Poverty eradication Programme (NAPEP) Textbooks and References Recommended books and eBooks for this course can be downloaded online as specified for References and further readings. Assignments An assignment file and marking scheme will be made available to you. This file presents you with details of the work you must submit to your tutor for marking. The marks you obtain from these assignments shall form part of your final mark for this course. Additional information on assignments will be found in the assignment file and later in this Course Guide in the section on assessment. Tutor-Mark Assignment (TMAs) You are required to submit a specified number of Tutor-Marked Assignments (TMAs). Every unit in this course has a tutor-marked assignment out of which you will be assessed on four of them and best three will be selected for you. The best three 6 TMAs selected for you shall form 30 percent of your total marks. You are expected to send your completed assignment and TMAs to your Tutor on or before the deadline for submission. In case you are unable to complete your assignments on time, kindly contact your Tutor to discuss the likelihood of extension. Note that extension will not be granted after due date, unless under extraordinary situation. Final Examination and Grading You shall be examined on all areas of this course and your final examination for ECO146 shall be 3 hours duration. It is necessary that you read through the units over and over again before the final examination. The final examination shall cover all the self-assessment questions for practice and the tutor-marked assignments that you have come across earlier. Thus it is advisable you revise the whole course material after studying from the first to the last units before you sit for the final examination. It is also advisable that you evaluate the tutor-marked assignments and your tutor’s comments on them before you sit for the final examination. Course Marking Scheme The table below displays the broken down of how the course marked are allocated Assignment Marks Assignments (Best three assignments out of four that is 30% marked) Final Examination 70% Total 100% Presentation Schedule The date of submission of all assignments and date for completing the study units as well as the final examination dates shall be communicated to you online. Course Overview The Table below describes the number of units contained in ECO 146, number of weeks to complete them and end of unit assignments. 7 Units Title of Work Week’s Assessment Activities (end of unit) Module 1 Understanding Economic Structure and System 1 Concept of Economic Structure Week 1 Assignment 1 2 Concept of Economic System and Week 1 Assignment 2 structural Dualism 3 Profile of the Nigerian Economy Week 2 Assignment 3 4 Overview of the Nigerian Economy Week 2 Assignment 4 Module 2 The Nigerian Agricultural sector 1 The Characteristics and Importance of Week 3 Assignment 1 the Nigerian Agricultural Sector 2 The Agricultural Sector during Pre- Week 4 Assignment 2 Independence and Post-Independence Period 3 The Challenges and Prospects of the Week 5 Assignment 3 Nigerian Agricultural Sector 4 Policy Intervention in the Nigerian Week 5 Assignment 4 Agricultural Sector Module 3 The Nigerian Industrial Sector 1- General Overview; Manufacturing Subsector 1 Concepts and Importance of the Week 6 Assignment 1 Industrial Sector 2 The Manufacturing Subsector during Week 6 Assignment 2 Pre Independence and Post- Independence Period 3 The Challenges and Prospects of the Week 7 Assignment 3 Industrial Sector in Nigeria Module 4 The Nigerian Industrial Sector 2- Mining and Quarrying Subsector 1 The Characteristics and Importance of Week 8 Assignment 1 8 Mining 2 The Crude Oil Industry Week 9 Assignment 2 3 The Solid Minerals and Associated Week 10 Assignment 3 Natural Gas Industry 4 The Challenges and Prospects of the Week 11 Assignment 4 Mining Subsector Module 5 Economic Plans, Policies and Programmes 1 1 Development Planning in Nigeria (1st - Week 12 Assignment 1 4th Plans) 2 Indigenisation Policy Week 13 Assignment 2 3 Structural Adjustment Programme Week 14 Assignment 3 (SAP) 4 National Economic Empowerment and Week 15 Assignment 4 Development Strategy (NEEDS) 5 National Poverty Eradication Week 15 Assignment 5 Programme (NAPEP) Revision Week 16 Examination Week 17 Total 17 Weeks How to Get the Most from this Course The study units in distance learning are replacements of the university classroom lectures. A major advantage of distance learning is that you can read and work at the same time through specially designed study materials. It assists you to study at your own pace, your own time and places that go well with you. Consequently, you shall have to read the lectures instead of listening to a lecturer. Just like a lecturer might give you some readings to do, so also are the study units which provides you with readings on the units as well as exercises to do at the end of each units. It also consists of instructions on when you should read each unit in the course material and when you should do your assignments. The study units follows a common simple format where the first item is an introduction to the subject matter of each unit followed by how a particular unit is integrated with the other units and the whole course. In each unit, there are set of learning objectives intended to assist you to know what you should be able to do or what you should grab from the unit after completing it. These objectives should be your study guide such that at the end of completing each 9 unit, you should reflect and check whether you have achieved the set objectives. Cultivating this habit will considerably increase your probability of passing the course. The main body of a unit guides you through the required reading from other sources. This will guide you through reading from other sources such as your text book or course guides. Realistic plans of working through the course are as follows: Phone or email your tutor if you have any trouble with any unit. Do not hesitate to call or email your tutor to provide assistance to you when you need one. In addition, follow the advices below carefully: 1. It is advisable you read the course guide with necessary care. See this as your first assignment. 2. Try to arrange a study plan by referring to the Course Overview in the Course Guide. The expected time to spend on each units and the assignment related to it should be well noted. Writing out your own dates for working on each unit according to your study plan is a good idea 3. Stick to your study plan after you have created one. Student usually failed because they are lagging behind in their course work. In case you have any complexity in your study plan, do not hesitate to inform your tutor before it is too late. 4. Turn to each unit and read carefully the introduction and the objectives for them. 5. Information about what you need for a unit is given in the “Overview” at the beginning of a unit. 6. The contents of a unit is presented in such a way that it provides you with a sequential order to follow, so work through the course units. As you work through each unit, use it to guide your readings. You may be required to read sections from one or more references other than the Course Material. 7. It is suitable if you can review the objectives for each unit for you to know if you have achieved them or not. In case you feel uncertain after reviewing the objectives, review the study material or consult your tutor. 8. But when you feel convinced that you have achieved unit objectives, you can then move to the next unit. Progress unit by unit through the course and space your study plan such that you ensure you’re on to-do list. 10 9. After submission of an assignment, do not wait for your marks before you proceed to the next unit so as to keep to your study plan. If you have any question, clarification or observation, contact your tutor as soon as possible. 10. On completion of the last unit, evaluate the course; check that you have achieved the objectives of each unit as listed in each unit and the overall Course objectives in the Course Guide. Then get prepared for the final examination. 11. The latest course information to keep you current about the course will be continuously available at your study center. So keep in touch. Facilitators/Tutor and Tutorials There are six hours of tutorial for this course with allocated dates, time and location of tutorial which you will be notified of. You will also be notified of your tutor’s name, phone number and email address as soon as you are allocated a tutorial group. Your completed and submitted assignment shall be marked by your tutor and you get your grade online. For this reason, you are to closely monitor your progress just as your tutor is doing. Tutor shall be ready to assist you as you move through the course when any difficulty is observed. Ensure you email your tutor-marked assignment to your tutor before the deadline. It would be marked by your tutor and your marks are email and text to you. As mentioned earlier, feel free to contact your tutor by email, phone or through your discussion group whenever you need help. You may need to contact your tutor under certain circumstances, for instance:  If you do not understand any part of the study units or the assigned readings  If you have problem answering the self-assessment questions;  If you have question or clarification on your assignment, your tutor’s comments on the assignment and TMAs or with your grading. You shall be doing yourself good by attending tutorials because of the opportunity it provides for you to have face-to-face contact with your tutor and also to ask questions which are instantly answered. Any problem faced in your course of study could be raised, you as well as others could benefit from participating in active discussions and in asking questions you prepared before attending the tutorials. 11 Summary This Course guide provides you with an overview of what you should expect in the course of study. ECO 146: Nigerian Economy in Perspective 1 gets you acquainted with the profile of the Nigerian economy; the evolution, structure and contribution of the agricultural and industrial sectors of the economy were equally exposed. The course further appraises the structure of some past and present government plans, policies and programmes as it affects the economic structure and development in Nigeria. 12 NATIONAL OPEN UNIVERSITY OF NIGERIA Nigerian Economy in Perspective ECO 146 SCHOOL OF ARTS AND SOCIAL SCIENCES COURSE MATERIAL Course Developer: Ayanwale Abiodun Olayinka Samsideen Department of Agricultural Economics/Post graduate School University of Ibadan COURSE EDITOR Dr. Ayila Ngustar 13 ECO 146: NIGERIAN ECONOMY IN PERSPECTIVE CONTENTS Module 1 Understanding Nigerian Economic Structure and System Unit 1 Concept of Economic Structure Unit 2 Concept of Economic System and Structural Dualism Unit 3 Profile of the Nigerian Economy Unit 4 Overview of the Nigerian Economy Module 2 The Nigerian Agricultural sector Unit 1 The Characteristics and Importance of the Nigerian Agricultural Sector Unit 2 The Agricultural Sector during Pre-independence and Post- Independence Period Unit 3 The Challenges and Prospects of the Nigerian Agricultural Sector Unit 4 Policy Intervention in the Nigerian Agricultural Sector Module 3 The Nigerian Industrial Sector 1- General Overview; Manufacturing Subsector Unit 1 Concepts and Importance of the Industrial Sector Unit 2 The Manufacturing Subsector during Pre-Independence and Post- Independence Period Unit 3 The Challenges and Prospects the Industrial Sector in Nigeria Module 4 The Nigerian Industrial Sector 2- Mining and Quarrying Subsector Unit1 The Characteristics and Importance of Mining Unit2 The Crude Oil Industry Unit 3 The Solid Minerals and Associated Natural Gas Industry Unit 4 The Challenges and Prospects of the Mining Subsector 14 Module 5 Economic Plans, Policies and Programmes 1 Unit 1 Development Planning in Nigeria (1st- 4th plans) Unit 2 Indigenisation Policy Unit 3 Structural Adjustment Programmme (SAP) Unit 4 National Economic Empowerment and Development Strategy (NEEDS) Unit 5 National Poverty eradication Programme (NAPEP) 15 MODULE 1 UNDERSTANDING NIGERIAN ECONOMIC STRUCTURE AND SYSTEMS The general aim of this module is to introduce you to the basic concept of economic structures and systems which is essential to the understanding of the workings of any economy. Key elements include the definition of economic structure and systems. In addition, you will be introduced to the broad profile and structure of Nigerian economy as a follow up to the theoretical framework aforementioned. This module aims at providing theoretical background for the comprehensive understanding of the empirical profiles and structure of the Nigerian economy in aggregate and sectoral terms. This module which introduces the concept of economic structure and system is made up of four units; in the first unit, you will have the opportunity of acquainting yourself with definitions of economic structure, determinants of economic structure and sector as a basic unit of structural analysis. The second unit reviews the various economic systems as a determinant of the economic structure in addition to structural dualism and factors of diversity. In the third unit, an insight into the profile of the Nigerian economy is given while the last unit discusses a general overview of the Nigerian economy in aggregate terms. Successive units in this module are linked with one another. By the end of this module, you would have refreshed your memory on the meaning of economic structure, identify various types of economic systems and conceptualise the profile and structure of the Nigerian economy. Unit 1 Concept of Economic Structure Unit 2 Concept of Economic System and Structural Dualism Unit 3 Profile of the Nigerian Economy Unit 4 Overview of the Nigerian Economy 16 UNIT 1 CONCEPT OF ECONOMIC STRUCTURE CONTENTS 1.0 Introduction 2.0 Objectives 3.0 Main Content 3.1 What is Economic Structure? 3.2 Why the Study of Economic Structure? 3.3 What is the Key determinant of Economic Structure? 3.4 Through What Unit is Economy Analysed? 4.0 Conclusion 5.0 Summary 6.0 Tutor-Marked Assignment 7.0 References/Further Readings 1.0 INTRODUCTION You must have read the Course Guide. I also assume that you have familiarised yourself with the introductory comments in Module 1. This unit is the first among the four constituents units of this module. The main thrust of this unit is to introduce you to ‘economic structure’ as a concept and expound its significance, highlight the importance of the study of economic structure, identify ‘economic system’ as a major determinant of economic structure as well as ‘sector’ as a basic unit of economic structural analysis. This unit is fundamental to the understanding of subsequent units and modules. This is simply because other units and modules will be discussed on the basis of the fundamental concepts explained here, hence, requires your maximum attention and understanding. 2.0 OBJECTIVES At the end of this unit, you should be able to:  Define the concept of economic structure as scholarly established and in your own words  Enumerate the importance of the study of economic structure  Identify the main determinant and unit of analysis of economic structure  List with relevant examples different types of sectors that exist in Nigeria 17 3.0 MAIN CONTENT 3.1 What is Economic Structure? Generally, our focus in this course is to analyse the structure of the Nigerian economy in the light of relevant features and performance indices before and after independence. To start with, I consider it important for us to examine what ‘economic structure’ is all about. I believe this will provide a convenient platform for us to have a full grasp of the entire course content. Let us begin our understanding of the concept of economic structure by first defining the word ‘economy’. According to Lipsey (1983) an economy refers to any specified collection of interrelated set of marketed and non-marketed productive activities. In essence, ‘Nigerian Economy’ refer to all such economic activities taking place in the geographical domain of Nigeria (Domestic Economy) or all such economic activities of Nigerian residents wherever in the world they perform such activities (National Economy) (Anyanwu et al, 1997). Over time various scholars have developed numerous definitions of economic structure but all seems to have a common feature that assists you in forming an opinion of what ‘economic structure’ is all about. However, a review of some of these definitions will broaden your knowledge on the concept and more importantly arm you with facts to enable you construct a definition of your own. Literarily, economic structure can be defined in terms of institutional arrangements aimed at the decision on what, how and for whom goods and services in an economy are to be produced and consumed. In a more technical sense, some definitions of economic structure are enumerated below: Todaro (1982) define the concept of economic structure as the organisational, institutional and social framework of any economic system including the nature of resource ownership. Anyanwu et al (1997) referred to economic structure as a complex organisational framework, interlaced network, configuration or outline of logical connectives through which activities of an economy are coordinated or aligned. 18 According to CBN (2000), the structure of an economy reflects the norms, conduct of production activities or established production distribution patterns within the adopted economic system. In another definition, Schalkwyk (2008) describes the structure of an economy as a function of the sum of all the different economic activities in the geo-political boundaries of that area. More recently, CBN (2010) defines the structure of an economy as the organisational and institutional framework which determines the forms of resource ownership, production and distribution of goods and services. In a more explicit term, Riley (2011) defines economic structure as a term that describes the changing balance of output, trade, incomes and employment drawn from different economic sectors–ranging from primary (farming, fishing, mining etc.) to secondary (manufacturing and construction industries) to tertiary and quaternary sectors (tourism, banking, software industries). The structure of an economy therefore includes the structure of production (such as agriculture and industrial production, the financial system, factoral composition and value added, the availability at a given time of labour, enterprise, capital and natural resources, functional distribution of income, composition of sources and uses of resources (for consumption and investment)). It also includes the institutional base of the economy- including political system, the legal framework and the agencies for its enforcement. Furthermore the established pattern of social organisation and control (including the existence of freedoms of special-interest organizations like trade unions) the agencies of public administration, and the physical infrastructure, providing transport and communications- and demographic variables including age and dependency characteristics of the population and the degree of urbanisation are integral part of economic structure. Unlike many other concepts, the definition of economic structure, even though numerous are not so dispersed. The definition seems to be close and in total conformity with one another except for scope of definition. It follows from the above definitions that the structure of an economy could be perceived as the basic organs and processes of reaching decisions in the production and allocation of resources in the economy. Thus, a change in the structure of an economy in the desired direction will ensure the attainment of the overall objective of economic development and vice versa. The basic elements and the characteristics of structural diversity among countries are in variations of the geographic patterns, historical evolution, production 19 methodologies and the size of the public and private sectors. Also included in these factors are the sociological features, political settings and external dependence. Changes in economic structure are a natural feature of economic life but they bring challenges in terms of reallocating factors of production. For example, a shift in production and jobs in one sector can lead to problems of structural unemployment. Issues on structural diversity and the factors responsible for such will be discussed in the next unit of this module. SELF ASSESSMENT EXERCISE 1 In line with scholarly guide from the above definitions, construct a definition of your own on ‘economic structure’. 3.2 Why the Study of Economic Structure? The significances of the study of economic structure are numerous and its importance cannot be over emphasized. These include the following: i. The study of the structure of the economy provides adequate information on the form conduct and performance of the economy meant for adequate policy or as a means of charting the future with significant measures of certainty. ii. The study of economic structure enables us to formulate policies to prevent or minimize deviations from the accepted developmental or structural norm. This implies ensuring that the economy is structurally balanced- all the sectors are developed in an analytical consistent manner such that the economy’s growth potential is not impaired or retarded due to the dominance of one or some sectors or the failure of other sectors to contribute commensurately in the overall development process. iii. It also enables us to check the dominance of one sector over the other as well as ensuring the contribution of all sectors to overall developmental process. iv. With the study of economic structure, we will be in a position to design measures of economic structure which gives an idea of economic enhancement or otherwise impediments. v. Also, a study of this nature assist us in discovering the degree to which growth is promoted, to whom the benefits is accruing, how far the process of economic independence is proceeding and how well the scarce resources of the nation are being utilised to the benefit of the country and the citizenry. vi. The study of economic structure also enables us to appraise the economy in terms of its past status, the attendant changes over the years and the extent to which it has facilitated the nation’s economic, social and political progress. vii. It also assists us in evaluating the attainment of government or nation’s objective as well as the effectiveness of policy instruments, strategies and programmes. 20 SELF ASSESSMENT EXERCISE 2 In What way is the study of Economic Structure significant in Nigeria? 3.3 What is the Key Determinant of Economic Structure? The structure of any economy is largely determined by its ideology and invariably its economic systems. The economic system, a product of the economic ideology of a country exercises a substantial influence on its structure. Three of this economic systems are prominent; the market or capitalist economic system, the centrally planned or social system and the mixed economic system. The ownership and distribution of means of production varies in these systems and thus affect decisions on the production and allocation of resources in the economy. Hence, a thorough understanding of the concept of economic system is essential to the workings of the structure of any economy. You will be exposed in details to various types of economic system as well as their features in the next unit. SELF ASSESSMENT EXERCISE 3 Aside the economic system, is economic structure determined by other factors? 3.4 Unit of Analysis of Economic Structure Having refreshed your memory on the concept and importance of economic structure as well as underscoring the importance of economic system in determining economic structure, it is pertinent to introduce you to the unit of analysis of economic structure. An economy can be analysed as a whole thus representing the broad aggregates or sum total of all activities in the economy. In this sense, the resultant effect of activities is cumulated in certain indicators; hence the contribution of component parts is not clearly defined. On the other hand, an economy can be analysed in terms of its component parts often referred to as ‘Sectors’. This involves breaking down of economic activities into various units and the contribution of each unit analysed. A change in an economy is often discussed in terms of sectors. These economic sectors are numerous and often classified as ‘primary’, ‘secondary’ and ‘Tertiary’ sectors (see Fig. 1.1.1) 1. The Primary Sector This sector includes activities directly related to natural resources exploration. The sector is engaged in the extraction of renewable and non-renewable natural 21 resources. Their outputs are basic input into the secondary sector. Activities under this sector include farming- crop agriculture, Livestock, forestry, Fishing, Lumbering and mining – oil and gas extraction, solid minerals mining, quarrying etc. 2. The secondary Sector The secondary sector covers all other goods production in the economy, including the processing of materials produced by the primary sector and itself. Manufacturing is the main element in this sector. It also includes construction and public utility industries of gas, water and electricity. 3. The Tertiary Sector All private sector service activities such as transportation, distribution, insurance, banking and finance, communication, hotel and restaurant, real estate, housing and all public sectors activities such as defence and health fall under this sector. Fig 1.1.1 Classification of Sectors From another point of view, Anyanwu et al (1997) stated that the Nigerian economy can be structurally classified broadly into four namely: 1. Production 2. General Commerce 3. Services and 4. Others. 22 1. Production is made up of: a. Agriculture (cropping, livestock, forestry and fishing) b. Manufacturing c. Mining and Quarrying d. Real Construction 2. General Commerce is composed of: a. Bills Discounted b. Domestic Trade c. External Trade (import and export) 3. Service consists of: a. Public utilities b. Transport c. Communication 4. Other Sectors are: a. Credit and Financial institution b. Producer of Government service c. Miscellaneous (personal, professional, Community) SELF ASSESSMENT EXERCISE 4 Attempt a classification of 10 working members of your family into primary, secondary or tertiary sector workers. 4.0 CONCLUSION From our discussion so far on the concept of economic structure, we can infer the following facts: 23  For effective functioning of any nation, it must possess a formidable structure upon which its economy is built.  The economic structure describes how an economy is organised in terms of production and allocation of resources.  A study of economic structure serves as a diagnostic as well as planning tool in the economy  The structure of any economy is largely determined by its economic ideology often referred to as ‘economic systems’.  An economy is best analysed in terms of its simplest unit termed ‘sectors’  The three main sectors in any economy are the ‘primary’ ‘secondary’ and ‘tertiary’ sector 5.0 SUMMARY In this unit, we have attempted to relate some definitions of economic structure from various scholars of repute. Also, from the point of view of harmonisation, you have learnt that all the definitions agreed to the fact that the ‘structure of an economy’ refers to basic organs and processes of reaching decisions in the production and allocation of resources in the economy and as such the study of economic structure is very important. Economic system was equally identified as the key determinant of economic structure while the three major categories of sectors in an economy were also described. I believe your understanding of this unit has given you a basis for the understanding of the next unit and infact subsequent modules. I expect you by now to be anxious of reading more about economic ideology and systems which will be duly served in the next unit. 6.0 TUTOR-MARKED ASSIGNMENT Submit a one page essay (A4, 1.5 spacing, 12pts, Times New Roman Font) on the Meaning of, and significance of the study of economic structure 7.0 REFERENCES/FURTHER READING Anyanwu, J.C., A. Oyefusi, H. Oaikhenan and F.A. Dimowo (1997). The Structure of The Nigerian Economy (1960-1997), Joanee Educational Publishers Ltd., Anambra, Nigeria. 661pp. Ayodele, A.S. and G.O. Falokun (2005). The Nigerian Economy; Structure and Pattern of Development. Printoteque, Lagos, Nigeria. 301pp. Central Bank of Nigeria (2000). The Changing Structure of the Nigerian Economy and Implications for Development. Communications Limited, Lagos, Nigeria 24 Central bank of Nigeria (2010). The Changing Structure of the Nigerian Economy. Mordi, C.N.O., A. Englama and B.S. Adebusuyi (eds.) Lipsey, R.G. (1983). An Introduction to Positive Economics. 6 ed. ELBS London Olaloku F.A (1979). Structure of the Nigerian Economy. Macmillan Press Limited, London. Todaro M.P (1982). Economics for a Developing World. Longman Group limited, Essex, U.K. Rilev, G (2011). A level Economics blog. Available at: tutor2u_econ Schalkwyk, Aren Van (2008). Economics, Available at Wikianswers- answers.com 25 UNIT 2 CONCEPT OF ECONOMIC SYSTEM & STRUCTRAL DUALISM CONTENTS 1.0 Introduction 2.0 Objectives 3.0 Main Content 3.1 Economic ideologies 3.1.1 Liberalism 3.1.2 Laissez-faire 3.1.3 Capitalism 3.1.4 Imperialism 3.1.5 Socialism 3.1.6 Communism 3.1.7 Mixed Economy 3.2 Economic Systems 3.2.1 The Pure Market Economic System 3.2.2 The Developed Market Economic System 3.2.3 The Centrally Planned/Socialist Economic System 3.2.4 The Mixed Market Economic System 3.2.5 The Market Socialist Economic Systems 3.3 Structural Dualism in Developing Economies 3.6.1 Definition and Forms of Structural Dualism 3.6.2 Elements of Structural Diversity in an Economy 4.0 Conclusion 5.0 Summary 6.0 Tutor-Marked Assignment 7.0 References/Further Readings 1.0 INTRODUCTION You will recall that we established in unit 1that the structure of an economy is largely determined by the economic system which is a function of the economic ideology of the nation. This unit is the second unit in this module. Here, we shall begin our discussion with an exposition of different economic ideologies that exist in the world viz: Liberalism, Laissez-faire, Capitalism, Imperialism, Socialism, Communism and Mixed economic ideologies. I also attempt to give a further insight into different types of economic systems (markets) which emanate from these ideologies. The economic systems will be extensively discussed under five different subheadings namely Pure Market, Developed Market, Centrally Planned or Socialist, Mixed Market and Market 26 Socialist Economic Systems. The level of similarities in the two separate sets of discussions should not surprise you; it only reiterates the fact that the economic systems are moulded from various economic ideologies. Lastly, in this unit, issues on structural dualism in the light of its meaning, types and factors of diversity will be briefly mentioned. 2.0 OBJECTIVES At the end of this unit, you should be able to:  Describe the philosophy of various ‘Economic Ideologies that exist in the world  Highlight the features and giving examples of countries that operates various ‘Economic Systems  Define ‘Structural Dualism’  Enumerate factors that accounts for structural diversity in an economy 3.0 MAIN CONTENT 3.1 Economic Ideologies 3.1.1 Liberalism This ideology postulates the idea that freedom is central to the realisation of human personality. The idea of freedom won a hold on popular imagination in the seventeenth century and from then on, was one of the moving forces of history. This ideology basically seeks to free man from oppressive authorities. When related to the Nigerian experience, this was the ideology in vogue during the fight for independence in the 1950’s. 3.1.2 Laissez-faire A variant of liberalism is the laissez-faire ideology. Here the bourgeoisie in their quest for power appropriated liberalism as its ideology and gave it a narrow interpretation. Its central notion was the natural right to private property and economic freedom that is based on it. The bourgeoisie were of the opinion that complete economic freedom for its members would lead to an ever increasing expansion of wealth for the society. The bourgeoisie claimed political predominance because they believed that the social function of wealth creation was in their hands. They then challenged the existing dynastic state and the fundamental basis of its existence in the guise of democracy- a government by them. The bourgeoisie therefore advocated for a situation whereby governance should be totally divorced of all economic activities. In other words, the doctrine of laissez-faire maintained that if the economy were freed from government shackles, the energies of individual entrepreneurs would be optimally productive. 27 They believed the heart of the economy was the market for which people would produce in anticipation of consumer demand and in expectation of a profit. The market was said to be democratic because the consumers was assumed to be king, but its relationship to income was often overlooked. Under laissez-faire the market also operated for labour. Wages accordingly were considered to be rationally determined by supply and Demand. 3.1.3 Capitalism It is often considered to be an off-shoot of liberalism. Capitalism is an ideology that is based on private ownership of means of production. It is characterised by a multitude of competing producers, non-interference of government in the economy and the market being a regulator of competition. Other features include: each entrepreneur accepting the profit as well as the risks of his activities, the owner of an enterprise also serving as its manager and no responsibility by the state for its people’s economic welfare. 3.1.4 Imperialism This means the highest and last stage of capitalism, when ‘free competition gives way to the dominance of monopolies and finance capital is established; the export of capital has acquired pronounced importance; the division of the world among the international trust has begun; the division of all territories of the globe among the biggest capitalist powers has been completed (Lenin, 1985). Though the vagaries of time have introduced some amendments, this definition of imperialism remains valid to this day. Even though Colonial empires have collapsed and dozens of independent developing countries have arisen, neo-colonialism has superseded colonialism. Imperialism is characterised by parasitism and decay, manifested in the disparity between the growth of productive forces and the vast potentialities offered by modern science and technology. 3.1.5 Communism This refers to the highest stage of socialism where people receive their income on the basis of their needs. It refers to a system of total control of social life by self- appointed elite (Mark, 1973). Full-fledged socialism or communism would be a state of affairs in which scarcity would have been overcome and production would be for use and not for exchange, socially planned for the benefit of the educated and the participating working masses (Nove). 28 SELF ASSESMENT EXERCISE 1 In what way is imperialism different from communism economic ideology? 3.1.6 Mixed Economy After World War I, it became obvious that the economy of the western world (capitalism) has lost steam. The supposed “invisible hands of market mechanism” could not equilibrate the economy again. The economy began to fluctuate in a turbulent manner. The advent of Keynes ‘general theory of employment, Interest and Money (1936) further cleared the air on the need for some measure of government intervention in the economy. In his opinion the great depression could have been avoided if Governments consciously adopted fiscal policies to stimulate aggregate demand. After World War II, the western countries, afraid that a repetition of the great depression succeeding the First World War might occur began to imbibe Keynessian theory of stabilising their respective economies by the instruments of monetary and fiscal policies. This was a deviation from the ideal of capitalism. Thus, true in some measures to the postulates of Karl Max, Capitalism as practiced in Western Europe especially before the First World War came to climax gave way to a form of a mixed economic ideology. From the other of the continuum, socialism began to face great challenges especially in international trade, which is beyond the scope of its political influence. Under command control, there are no incentives for investment, hence the slow pace of growth and development. The management theory of motivation find no place in socialism as it does in the capitalist system. Hence, today most hitherto socialist ideologue countries have opened up to free enterprise in certain areas of the economy while government still hold tight to certain other sector. SELF ASSESMENT EXERCISE 2 What is the major reason that led to the evolution of a mixed economic ideology? 3.2 Economic Systems 3.2.1 The Pure Market or Capitalist Economic System In a pure market or capitalist economic system the emphasis is on private ownership and control of resources, production and distribution process. There is complete decentralisation of everything. Competition is the key element in a capitalist economy and this is presumed to reinforce efficiency. The productive assets are purely in the hands of private owners whose objective of operation is profit maximisation. The economy is based on ‘Laissez faire’ ideology in which market force determines the prices and distribution of goods that is produced. The ‘invisible hand’ as referred to by Adam Smith is expected to ensure that profit maximization guarantees the maximum 29 wealth of the society. This subsequently promotes people’s economy welfare. An example of the country that operates this type of system is the United State of America. 3.2.2 The Developed Market Economic System As earlier mentioned the capitalist system recognises total private sector ownership of resources (production and allocation). The developed market economic system modifies this feature by bringing in some elements of government participation in economic activities. This is as a result of some problems associated with capitalism such as market failures arising from some degrees of inefficiency in operation. In this system, government provides for the planning and policy framework of operation to direct the economy and subsequently participate in economic functioning of the society. In this process the government generates revenue through taxes and other sources of income and thereafter allocates public expenditure for investment and recurrent activities in the economy. Within the economic system, government attempts to exert some controls and regulations over the private sector for consistency of activities with government policy. In doing this, they also eliminate the undesirable impact of the private sector. Hence, the Adam Smith ‘invisible hand’ is replaced with what is termed ‘guiding hand’ of the national or central government. Economies that fall under this category include the United Kingdom, Canada, Japan, Germany and Australia. SELF ASSESSMENT EXERCISE 3 In what way is the Developed Market Economic system different from the Pure Market Capitalist Economy? 3.2.3 The Centrally Planned/Socialist Economic System In a centrally planned economic system, the ownership of resources is vested in and centrally controlled by the state. In other words, production and distribution of activities are purely those of government. In this process, prices are statutorily determined to facilitate equitable distribution of goods and service. The socialist economic system which is operating at the extreme of total government control is termed a communist state. The socialist economic system is operated by the defunct Soviet Union, Hungary, Cuba, People Republic of China and Poland. It is important to note that some of the socialist countries like those of Eastern European countries are 30 presently engaging in some reform policies that are making them tend towards capitalist or mixed economic system. SELF ASSESSMENT EXERCISE 4 What are challenges of the ‘Socialist’ economic system? 3.2.4 The Mixed market Economic System In the mixed market economic system, the private ownership of resources is complemented with a substantial public sector ownership and participation in the production of economic activities. In a mixed economy, the prices of public goods are not often market determined but statutorily fixed in some cases to allow for economic development. The degree of mix varies from one country to another; the capitalist ideology dominates in some instances while the socialist tendencies are more prominent in others. Mixed economic system provides a form of compromise ground between capitalism and communism. The economy is planned in such a way as to guarantee stability and growth without unduly frustrating free enterprise. It must however be noted that such economy does not evolve overnight. It should normally start from one side of the continuum and graduated into mixed type. This way, the mixed economy will evolve and not imposed. Many developing economies inclusive of Nigeria fall within this category of economic system before the recent privatisation programme which is spreading across the global spectrum. Nigeria is a good example of an imposed mixed economy. Other countries that operate mixed economic system are Kenya, Tanzania, Uganda, India, Brazil, Mexico and South Korea. 3.2.5 The Market Socialist Economic Systems This is a form of mixed economic system characterised by the adoption of the price mechanism feature. The private sector ownership is jettisoned in favour of public ownership to reflect what is known as ‘The Market Socialist Economy’. By this process the ideals of both the capitalist and socialist systems could be derived. An example of a country that has thrived on this ideal is the former Yugoslavia. SELF ASSESSMENT EXERCISE 5 Is Nigeria presently more of a capitalist economy than a socialist economy? 31 3.3 Structural Dualism in Developing Economies 3.3.1 Definition and Forms of Structural Dualism As stated by Ayodele and Falokun (2005), structurally dualism can be defined as the stratification of the economy to two main components. This stratification could be in terms of modernization, growth, technology and so on. Forms of dualism include: i. Capital Dualism based on Arthur Lewis (1946) findings; ii. Social Dualism couched under Boeke’s (1953) exposition; iii. Technological Dualism with base in Higgings (1958) theory; and iv. Financial Dualism which Myint (1971) discovered. I do not intend to bother you with the details of the above mentioned type of dualism; they will be dealt with in more advance courses. 3.3.2 Elements of Structural Diversity in an Economy As earlier discussed, the structure of an economy reflects the type of economic system that operates in the society. However, there are some elements and/or discernible patterns which are expected theoretically and empirically too, to reinforce the prevalent structure in the course of its attainment of economic development status as a nation. These elements according to Todaro (1982): i. The geographical features in terms of the location, size, and the inherent ecological system; ii. The historical evolution as revealed mainly by the political, educational and social institutions as well as the cultural values; iii. The physical and natural resource endowments, particularly, land, mineral and raw material resources; iv. The demographic pattern and the degree of the development of human capital with respect to their number and skills; v. The relative importance of the public and private sectors; vi. The nature of production and the degree of the diversification of the production base; and vii. The type of political features with the degree of external dependence. SELF ASSESSMENT EXERCISE 6 How will the degree of physical and natural resource endowment influence structural diversity in an economy? 4.0 CONCLUSION From our discussion so far we have examine the basic features of various economic ideologies like Liberalism, Laissez-faire, Capitalism, Socialism, Imperialism, 32 Communism and Mixed economy. Similarly, the operation modes of the economic systems developed on the basis of these ideologies were discussed. We stated that in a pure market or capitalist economic system, the emphasis is on private ownership and control of resources, production and distribution process. Arising from some degree of inefficiency in operation, the developed market economic system modifies this feature by bringing in some elements of government participation in economic activities. At the other extreme, the centrally planned socialist economic system vested the ownership of resources and control in the state. The mixed market economic system complements the private ownership of resources with a substantial degree of public sector ownership and participation in the production of economic activities. Lastly, The Market Socialist Economic Systems is a form of mixed economic system characterised by the adoption of the price mechanism feature. We equally noted in our discussion that Structural Dualism involves the stratification of economy into two main components with elements such as modernisation and technology. Factors identified as responsible for diversity in the economy include: geographical features, historical evolution, physical and natural resource endowments, demographic pattern, the degree of the development of human capital and type of political features with the degree of external dependence among others. 5.0 SUMMARY This unit has exposed us to various features of the world economic ideologies as well as the feature of the three main types of economic systems with two modified economic systems. We equally gave relevant examples of countries that operate these economic systems. We concluded the unit with a discussion on structural duality while exposing the factors responsible for economic diversification. With this background on the concept of economic structure and system in unit 1 and 2, you have successfully prepared yourself for a thorough understanding of the profile and structure of the Nigerian economy that will be treated in the next two preceding units. 6.0 TUTOR-MARKED ASSIGNMENT Submit a one-page essay (A4, 1.5 spacing, 12pts, Times New Roman font) discussing any two of the elements of structural diversity mentioned in 3.6.2 above 7.0 REFERENCES/FURTHER READING Anyanwu, J.C., A. Oyefusi, H. Oaikhenan and F.A. Dimowo (1997). The Structure of The Nigerian Economy (1960-1997), Joanee Educational Publishers Ltd., Anambra, Nigeria. 661pp. Ayodele, A.S. and G.O. Falokun (2005). The Nigerian Economy; Structure and 33 Pattern of Development, Printoteque, Lagos, Nigeria, 301pp. Mark, M (1973): Modern Ideologies, St. Martin’s Press, New York pp1-2 Nove, A. The Soviet Economic System, George Allen and Unwin Ltd., p1 Todaro M.P (1982). Economics for a Developing World, Longman Group limited, Essex, U.K. 34 UNIT 3 PROFILE OF THE NIGERIAN ECONOMY CONTENTS 1.0 Introduction 2.0 Objectives 3.0 Main Content 3.1 The Geographical and Demographic profile of Nigeria 3.1.1 Background to Geographic and Demographic Profile 3.1.2 Geographical and Demographic Features of Nigeria 3.2 Socio-cultural, Political and Institutional Profile of Nigeria 3.2.1 Background to Socio-Political Profile 3.2.2 Socio-cultural, Political and Institutional Features of Nigeria 3.3 The Resource (endowment) profile of Nigeria 3.3.1 Background to Resource Endowment 3.3.2 Resource Endowment of Nigeria 4.0 Conclusion 5.0 Summary 6.0 Tutor-Marked Assignment 7.0 References/Further Readings 1.0 INTRODUCTION In the first two units of this module, the fundamental concepts upon which an economy can be analysed (i.e. the economic structure and systems) has been discussed in details. This has no doubt provided a foundation for the understanding of this unit and the next unit in this module. This third unit of module 1 tries to profile the Nigerian economy under various headings. These include: the geographical and demographic, socio-cultural, political and institutional, and resource profiles of Nigeria. In actual fact, all these aforementioned indices have a lot to do with the economic structure of the country as the economy does not operate in vacuum. In order words, the geographical and demographic settings, socio-cultural, political and institutional features and available resources among other factors to a large extent determine the structure of any economy. Similarly, the overview of the Nigerian economy as will be discussed in the next unit will be predicated on this background. This is the more reason why this unit must be treated with utmost attention and concentration. 2.0 OBJECTIVES At the end of this unit, you should be able to: 35  State some basic geographical and demographic features of Nigeria  Highlight some sociocultural and institutional features of Nigeria  Trace the political history of Nigeria  Enumerate Nigeria’s resource endowment 3.0 MAIN CONTENT 3.1 The Geographical and Demographic Profile of Nigeria 3.1.1 Background to Geographic and Demographic Profile The geographical features of an economy relates to the location, size, area and the ecology within the global spectrum. In this regard, the urban income disparity model emphasizes the importance of the location, nature and climate, the soil composition and forms with its associated vegetational distribution in the course of a nation. Emphasis could be laid on the physical size, the magnitude of the mineral deposits, soil fertility and soil types with the richness of the associated vegetation as well as the climatic conditions. All these combine to influence and or determine the magnitude of economic development potentials which a country has in its process of national development. In addition, rapid population growth and its associated density Vis-a Vis land availability and use play some dominant roles in the process of economic development. However, where land and population of a country are in surplus, while the methodology for production is crude, productivity of labour could be low and the per capita income in such nation would also be low and remain subsistent at best. But when modern techniques of production prevail, the reverse of the above points holds. In terms of demographic futures, theoretically, the population size of a country is actually indicative of the degree of nation’s potentials in human resources. Besides, it is a pointer to the evolution of a large market capable of stimulating demand that will induce economic growth. It is commonly assumed that the greater the population size, the likelihood of increased labour force and consequently larger productive system. If this assumption is true, then, the more relevant is human resource capacity building effort in any country’s developmental needs. This will in turn raise the right work ethics and subsequently the level of productivity. Against this background, the location, size, area, vegetation, population size and the level of manpower development would necessarily impact on the country’s divergence in economic structure. Thus, these features are examined in the next subsection. 3.1.2 Geographic and Demographic Features of Nigeria Nigeria is derived from the word ‘Niger’ which is the name of the river that constitutes the most remarkable geographical feature of the country. The country is geographically located within the global spectrum in the West African sub-regional zone; bounded in the west by Republic of Benin, in the east by the Chad Republic, in 36 the North by Niger republic, and in the south by the Atlantic Ocean. Nigeria is a sub- Saharan Africa (SSA) nation with an approximate area of 923,769 square kilometers (made up of 909, 890 square kilometers of land area and 13, 879 square kilometers of water). Nigeria is situated between 30 and 140 East Longitude and 40 and 140 North Latitude lying east in the tropical region. The longest distance from east to west is about 767 kilometers, and from North to South, 1,805 kilometers (FMWA, 2004; NBS, 2010). The country harbors above 50 percent of the population of the West African sub region. Its population which was about 55.6 million in 1963 census, estimated at about 79 million in 1979 reached about 140 million in 2006 census and a projected annual growth rate of 2.83 percent. With this population, Nigeria constitutes the largest country in Africa and also one of the most populous countries in the world. In terms of vegetation, the coast of Nigeria is a belt of mangrove swamps traversed by a network of creeks and rivers and the great Niger Delta. Beyond these are successive belts of tropical rain forests (that break into a more open woodland with hilly ranges) and the undulating plateau (with hills of granite and sandstone), rising from 809.6 meters on the average to 1,828.8 meters eastwards. Midway north of the country the vegetation is grassland interspersed with trees and shrubs, which terminate in the Sahel Savannah region of the semi-arid north north-east. The country can easily be categorized into five main vegetation belts. i. The swamp forest around the southern coastline; ii. The equatorial forests; iii. Deciduous forest; iv. The grasslands and v. The semi-desert scrub lands in the northern parts Its main rivers are the Niger and Benue which naturally partition the country into three unequal geographical parts- North, East and West. The other less important rivers include the rivers in Kaduna, Gongola, Crossriver, Imo and Anambra. There are a few notable mountains within the Eastern boundary and also on the northern plateau whose peaks are above 8,000 meters. Nigeria is also blessed with favourable and varied climatic conditions. The climate is equatorial and semi-equitorial in nature, characterised by high humidity and substantial rainfall. Although the climate is generally tropical, however in specific terms, it is wide ranged in its conditions as the country is broadly defined as generally hot and humid. In this regard, two main seasons emerge from these climatic conditions viz: 37 i. The wet/ raining season between April and October with prevailing wind blowing from the southwest; and ii. The dry season between November and March with its harmattan wind blowing from the northern part of the country. In most cases, the average temperature is within the range of 240C and 270C. In specific terms, the average annual temperature is about 210C with the Eastern Highlands and also on the Jos plateau. It is about 300C in Lagos and could be as low as 230C. Except for the plateau area, the northern part is usually hot and dry for most parts of the year. However, in the extreme north, the average high and average low could be about 430C and 100C respectively. The annual rainfall is about 51cm in most parts of the north while it is above 380cm in some parts of the south (NBS, 2009). SELF ASSESSMENT EXERCISE 1 What relative advantage do you think the above related geographical features conferred on the Nigerian economy? 3.2 The Socio-cultural, Political and Institutional profile of Nigeria 3.2.1 Background to Socio-political Profile In general terms, the social, cultural, educational, political and institutional characteristics of a community to a large degree reveal such country’s potentials for economic development. These features reflect the character, social norms and the social values bequeathed to it by the past history mainly through its experiences. In fact, while this is the true, situations in the United States of America where citizens have not merely built upon its colonial legacies but have also improved upon the system which it inherited; there are few others who merely assimilated such legacies which induce development but stuck to the cultural values. However, the cases of the developing countries tend to follow traditional system in most cases with those of the colonial overlords, subsequently resulting in the emergence of structural dualism. The institutional arrangements in the light of the dominance of the public-cum private sector in any economy usually determine the process of such country’s economic development and transformation. It is generally observed that in developing countries economies are usually mixed type made up of large public sector and small private sector. However, with the recent privatisation paradigm shift, this pattern could be changing slightly. It is usually argued that where markets are less developed, large public bureaucracies and capital intensive state owned enterprises would be necessary for the provision of required public goods and services. This argument therefore explains why public sector predominates in the production of utility services in most 38 developing countries. In the light of these, we shall examine the sociocultural, political and institutional profile of Nigeria as a country. 3.2.2 Socio-cultural, Political and Institutional Features of Nigeria The socio-economic setting of Nigeria is clearly dichotomised into rural and urban households, the rural population majors in agriculture as their economic mainstay, cultivating such food crops as maize, cassava, yam, sorghum, rice, millet, fruits, vegetable, pulses, cocoa, timber and rubber among many other crops and livestock activities while the urban sector majors in trading and public service with few elements of manufacturing. Historically, Nigeria is an agglomerate of various tribes and linguistic groups, brought together under one political umbrella by colonial fiat in the 1914 amalgamation. It therefore joined the bandwagon of federations through the pragmatic experimentation of the British colonial authorities. Given the various tribes and linguistic groups in the country, its choice of federalism as a governance mechanism could be defined as mainly fruititous and pragmatic. In recognition of this situation, the Nigerian federalism has usually been described as ‘unity in diversity’, which requires and involves cooperation, bargaining and conflict. Perhaps against the background of the foregoing, the federal socio-economic situation in Nigeria has usually resulted in a perpetual balancing of tension in the attempt to create unity without union among ethnic tribes in the country. Under federalism, the Nigerian economy has usually been economically planned with the objective of effective development since independence. It is logically easier to promote unity out of diversity through a unitary system, Nigeria, under military governments remained a federation on paper but in practical terms, most of the socio-economic development policies were pursued as if the country was under unitary principles. Politically, Nigeria was a British colony between 1868 and October 1, 1960. Given its diverse ethnicity, it became an independent federation in 1960 within the Commonwealth of Nations. On October 1, 1963, it gained a republican status but is still remained in the Commonwealth. Up till 1960, some parts of the Cameroons were part of Nigeria. However, in a plebiscite of February 1961, while the northern portion of the trust territory of the Cameroons decided to join Nigeria, the Southern proportion opted out of it. The country imbibed the Western parliamentary system of governance which it inherited from the British colonial overlords. The parliamentary system of government under its first prime minister, the late Alhaji Tafawa Balewa existed till January 15, 1966 before it was overthrown in a military coup d’etat consequent upon series of political crises which started in the former Western region. 39 There was a counter coup about July 1966 which culminated in the orchestrated secession of the Eastern Region under the name Republic of BIAFRA led by late Lt. Col. Odumegwu Ojukwu. The end of this secession was the outbreak of a civil war which lasted till December, 1970, having started in July 1967. Up till 1966 Nigeria was composed of four regions. – The East, Mid-West, North and the West respectively. By May 1967, particularly before the civil war broke out the country became divided into twelve states with a military decree. The state structure kept on expanding until it reaches the present structure of 36 states and the Federal Capital Territory stratified into six geopolitical zones. Table 1.3.1: Nigeria Geopolitical Zones Zone States within the Geopolitical Zone South West Ekiti, Lagos, Osun, Ondo, Ogun, Oyo South East Abia, Anambra, Ebonyi, Enugu, Imo South-South Akwa-Ibom, Bayelsa, Cross- River, Delta, Edo, Rivers North Central Benue, FCT, Kogi, Kwara, Nasarawa, Niger, Plateau North East Adamawa, Bauchi, Borno, Gombe, Taraba, Yobe North West Kaduna, Katsina, Kano, Kebbi, Sokoto, Jigawa,, Zamfara Source: FMWA (2004) Within the period of political transition, there were series of military change overs in government. In some cases the pledge by the military to return to the country to civil rule failed. Thus the military rule was protracted. By 1979 the country returned to the civil rule of governance which only lasted for about four years before the military government returned to the political scene. Civilian activities started again in 1999 with the Rtd. General Obasanjo led administration which lasted till 2007. This Obasanjo civilian regime was succeeded by a short-lived Umaru Musa Yaradua regime and currently Dr. Goodluck Ebele Jonathan. The country has changed its initial western parliamentary system to the American presidential system of government. 40 Fig. 1.3.1: Map of Nigeria Showing the States SELF ASSESSMENT EXERCISE 2 In your own opinion, does the political structure of Nigeria since independence has any effect (positive or negative) on economic structure and development? 3.3 The Resource profile of Nigeria 3.3.1 Background to Resource Endowment The natural endowments of a nation embrace the varieties of mineral resources. The magnitude of the deposits of such resources is expected to have significant impact on the pattern, character and nature of a nation’s process of economic development. For example, in some countries where resources are purely that of agricultural lands and mineral resources, the basic economic structure will be agrarian and subsequently primary. Where a resource is in abundance, most of such economy would be monocultural. That is, the tendency is for such economy to depend mainly on such a resource that is in abundance. Added to this fact, the nature of production in such a country would also tend to impact on the evolution of citizens’ occupational pattern. Aboyade (1983) noted that the availability of good fertile land should make it easier 41 for a country to solve agricultural problem. Nonetheless, modern scientific and technological advances are making it possible to overcome several deficiencies of nature. We may wish to note that some nations such as Japan, Israel and even United States of America who are with poor natural endowments have demonstrated globally, how resourceful technology, creative economic policies and determined national spirit can combine to turn resource handicap to economic development success stories. Admittedly, however, there is little doubt that for many countries (e.g African countries), the beneficence of nature still exercises a crucial influence on the pace of and pattern of economic development. 3.3.2 Natural Resource Endowment of Nigeria In Nigeria where there is the recognition of the importance of geographical fortunes, the issue of Adam Smith’s analysis of the relationship between division of labour and the extent of the market economy is well appreciated. Nonetheless, up till the early 1970’s, the Nigerian economy was predominantly agricultural, producing primary agricultural products- cocoa, groundnuts, hides and skins, palm produce and others for exports; various tubers and other crops for domestic consumption. However, with the discovery of crude oil at commercial scale in the early 1970s in Nigeria, economic activities changed significantly in favour of crude oil exploration, drilling-cum- extraction, and mining due to their profitable outlook. The crude oil sector has been the main source and engine of growth of the Nigerian economy, nonetheless, agriculture continues to remain the broad economic base of the country as well as the most dominant sector. It is important to recognize that farmers’ specialization in a type of product is usually dictated by some factors which include among others the variation in climatic conditions, the natural vegetation form and the soil topography. For example, in the south where there is plenty of rainfall, the specialization is in the production of staple tree and root crops- cassava yam, plantain, banana, timber and others. In the northern part with less rainfall farmers are usually confined or restricted to the production of grains such as maize, millet, sorghum and rearing of livestock. This pattern therefore constitutes regional specialization of food production which has virtually provided a base for the growth of the country’s inter-regional trade. The production of export crops does not seem to deviate from the dictates of climatic conditions. Export tree crops such as cocoa, rubber, wood, and palm produce are usually restricted to the wet zones of the southern part while others requiring less rain such as groundnuts and cotton are the peculiarity of the north with less rainfall. In between the northern arid zone and the southern humid zone is the area defined as the ‘middle belt’ which employs an intermediate type of climate. This type of climatic condition makes this area suitable for the growth and production of food crops of both the root and grain varieties. Additionally, this area further specialises in the production of vegetable oils- beniseed, Shea and soybean. 42 Certainly exploration of mineral resources, particularly, crude oil has been for long. This discovery at the commercial stage is within the later 1950s. Mining is currently gaining a recognisable position in the economy. Tin Ore, Columbite, Zinc and lead which are metallic minerals are found in sizable proportions on the Jos plateau. However, coal mining is concentrated within the Enugu area. Besides, zinc and lead mining are centred in Abakaliki and Owerri. Also, major deposits of lead and zinc are found in Lokoja as well as around Enugu. The main source of the country’s wealth in recent times, crude oil, is largely deposited in Delta, Rivers, Anambra, Imo, Bayelsa and Cross River states. Some quantum is available in the coastline of the south-west states. SELF ASSESSMENT EXERCISE 3 1. List out 10 natural resources and state where they are located in Nigeria 4.0 CONCLUSION In this unit, we learnt in terms of geographic and demographic feature that Nigeria is essentially a tropical region which constitutes the largest population in Africa with five main distinct vegetations. The country is blessed with rivers, mountains and two main seasons; dry and wet season of varying temperature and rainfall. Politically, Nigeria has operated under protracted period of military rule and currently stabilising her civilian rule and perfecting its acclaimed federalism system of government. Apart from natural agricultural resource endowment, Nigeria also possesses numerous natural resources of which oil and gas is dominant along with other solid minerals with great potential for exploration. Human and capital resources equally form a base for the Nigerian economy to thrive. 5.0 SUMMARY In this unit, we had the opportunity of analysing the fundamental features of the economy that goes a long way in shaping its structure as well as determining the pace of economic development. We started with an exposure of the geographical features of Nigeria and proceeded to a discussion on the Nigerian political system. To crown it the resource profile of Nigeria were rendered. In essence the unit forms bedrock for evaluating the potential of Nigeria as a nation and consequently the implication of these profiles in determining the economic structure of Nigeria. You will appreciate the knowledge of these profiles better when an overview of the Nigerian economic structure is being discussed in the next unit. 6.0 TUTOR-MARKED ASSIGNMENT 43 Which of the three sets of profile discussed in this chapter do you consider most important and why? 7.0 REFERENCES/FURTHER READING Aboyade, O (1983). Integrated Economics: A study of Developing Economics, Addison-Wesley Publishers, London Anyanwu, J.C., A. Oyefusi, H. Oaikhenan and F.A. Dimowo (1997). The Structure of the Nigerian Economy (1960-1997), Joanee Educational Publishers Ltd., Anambra, Nigeria. 661pp. Ayodele, A.S. and G.O. Falokun (2005). The Nigerian Economy; Structure and Pattern of Development, Printoteque, Lagos, Nigeria, 301pp. Federal Ministry of Agriculture, Water Resources and Rural Development FMAWRRD (1988). Agricultural Policy for Nigeria, FMAWRRD Publications Federal Ministry of Women Affairs (FMWA) (2004). Implementation of the Beijing Platform for Action and Commonwealth Plan of Action, April, 2004 National Bureau of statistics (NBS) (2009). Statistical Buletin; Agric Data, Available at: www.nigrianstat.gov.ng National Bureau of statistics (NBS) (2010). Statistical Buletin; Area and Climate, Available at: www.nigrianstat.gov.ng Odeleye, A.T. (2009). Nigerian Economy in Perspective (Vol.1) (Pre-colonial Era till Date), Larritone Books International, Ibadan Nigeria, 120pp Todaro M.P (1982). Economics for a Developing World, Longman Group limited, Essex, U.K. UNIT 4 OVERVIEW OF THE NIGERIAN ECONOMY 44 CONTENTS 1.0 Introduction 2.0 Objectives 3.0 Main Content 3.1 Background to overview of the Nigerian economy 3.2 The Colonial period (pre-independent economy) 3.3 The Post-Independence economy 4.0 Conclusion 5.0 Summary 6.0 Tutor-Marked Assignment 7.0 References/Further Readings 1.0 INTRODUCTION In the last unit you were treated to a discussion on the geographical, political and resource profile of Nigeria which is important in determining the structure of an economy. Hence, this unit gives a broad view of the structure of the Nigerian economy in holistic term as determined by the aforementioned factors. Although, specific mentions were made of different sectors, the intention here is to see the economic units as they interrelate as well as identify the dominance of one sector over the other as time progressed. By these, you will have an idea of the general performance of the economy before and after independence and in phases over this period of analysis before we move into independent analysis of different sector. You will surely find it informative. 2.0 OBJECTIVES At the end of this unit, you should be able to:  Categorise the Nigerian economy based on the three prominent criterion  Describe the features of the Nigerian economy during the pre-independence era  Summarize the features of the Nigerian economy and the sectoral performance during post-independence era 3.0 MAIN CONTENT 3.1 Background to overview of the structure of Nigerian economy Nigerian economy has undergone series of changes and transformation over time. For 45 the sake of analysis, the economic changes could be conveniently categorised into two major phases namely: 1. The Colonial (Pre-independence Era) 2. The Post-Independence Era The post-independence era could be further subdivided into three periods as follows: a) Pre-SAP period (1960-1985) b) SAP Period (1986- 1993) c) Post-SAP period (1994 till date) The Post independent economy can also be alternatively viewed from the point of view of successive decade in which case we have the following division: 1. First decade (1960-1970) 2. Second decade (1971-1980) 3. Third decade (1981-1990) 4. Fourth decade (1991-2000) 5. Fifth decade (2001-2010) In general, we are going to channel our analysis mainly towards the bivocation of pre- independence and post-independence period throughout this course. Now, let us discuss the economic activities in terms of sectoral contribution and or structure of national income during different era as mentioned above. SELF ASSESSMENT EXERCISE 1 Categorise the Nigerian economic analysis using the following criteria i. Independence ii. Structural Adjustment programme iii. Decades of analysis 3.2 The Colonial (Pre-Independence Era) Nigerian pre-independent economy was essentially a surrogate of the British economy. The country output was wholly primary product and mainly agricultural products. These include cotton, groundnut, rubber, palm oil, tin etc. The bulk of these were exported to Britain while the country also provides a virile market for British goods. In Nigeria, within the first ten years development plan (1945-1955) by the colonialist and the second plan (1955-1960), no conscious attempt was seen to have been made to accelerate economic growth. It is rather welfare and social services plan. 46 However, the economy witnessed some growth during the plan period but little is known about sectoral performance especially for the fact that most of the sectors were at the emerging stage except for agricultural sector which the country is culturally and traditionally noted for. The performance of the economy during the pre-independence period is summarized in the Table 1.4.1 below: Table 1.4.1: Nigerian Pre-Independent Economic Performance Indices Expenditure 1950 1955 1960 Increase 1950-1960 % Category( £) ( £) ( £) ( £) Amount( £) % Increase Per Annum Gross 699.3 891.9 1023.9 329.7 42.1 4.1 Domestic Product (GDP) Govt. exp. on 24.0 45.5 77.0 53.0 220.8 22.1 Goods and serv. (GE) Gross Fixed 48.4 102.6 158.0 109.6 226.4 22.6 Invest. (GFI) Consumption 609.4 805.5 870.0 260.6 42.76 4.28 Expen. (CE) G.E as % of 3.4 4.9 7.7 4.3 126.5 12.7 GDP GFI as % of 6.9 11.1 15.4 8.5 123.2 12.3 GDP C. E as % of 87.1 87.4 85.0 -2.1 -2.4 -0.2 GDP As shown in Table 1.4.1, the country’s Gross Domestic Product (GDP) increased by 42.1 percent between 1950 and 1960 while the percentage increase per annum was 4.1 percent. Similarly, Government Expenditure and Gross Fixed Investment increased tremendously by 220.8 percent and 226.1 percent respectively within the same period while Consumption Expenditure equally grew by 42.76 percent between 1950 and 1960. The annual increment for Government Expenditure, Gross Fixed investment and Consumption Expenditure were 22.1, 22.6 and 4.28 percent. However, Consumption Expenditure in relation to Gross Domestic Product declined by 2.4 percent as against Consumption Expenditure (as a percentage of Gross Domestic Product) and Gross Fixed Investment as a percentage of Gross Domestic Product) which respectively increased by 126. 5 and 123.2 percent. SELF ASSESSMENT EXERCISE 2 Which sector dominated the Nigerian economy before independence and why? 47 3.3 The Post-Independence Economy In the early post-independence era, the economy was still under the influence of Britain as Nigeria import and export trade was skewed in their favour. The first and second national development plans culminated into substantial overall economic growth as indicated in the rise in Gross domestic product. The period 1970’s witnessed a structural change in the economy due to the emergence of crude oil as a major contributor to Gross National Product (GNP) and the growing dominance of building and construction as an item of capital formation. Manufacturing fell below expectation due to infrastructural constraints and scarcity of willing and competent partners. The agricultural sector witnessed a negative total average growth of -0.4% and become stagnated during the third development plan. About 23 institutions were established during this period to provide economic drive for the country e.g. the Central Planning Office, Agricultural Development Bank, Nigeria National Oil Corporation etc. The economic growth were hindered by oil glut of the 1980’s, high level of corruption , high level of inflation, lack of good data base and non-evolution of coherent policies to give a direction to the economy. From the point of view of decades after independence, in terms of national income, agricultural sector dominated the economy in the first decade with no significant contribution from the oil sector. The second decade witnessed agriculture maintaining the lead in the contribution to GDP in the first half while this lead was taken over by the mining and quarrying sector in the second half due to increase in oil prices and rise in nation’s oil reserve. Others sectors had insignificant contribution to the GDP. In the third decade, the agricultural sector assumed its dominance of the national economy. Crude oil rather remains the foreign exchange earner. The fourth and the fifth decades witnessed a decline in agricultural growth and overreliance on oil as the major income source. The Structural Adjustment Programme (SAP) has been used to bivocate the economy into three phases. We have the Pre-SAP period (1960-1985); SAP Period (1986-1993) and the Post-SAP period (1994 till date) each era with their own feature. The structural adjustment programme with all its attendant tentacles such as deregulation, massive devaluation of Naira privatisation, liberalisation etc. no doubt has effect on different sectors of the economy during the SAP era. The building and construction sector witnessed a reduction in growth rate due to high cost of material, so also the the manufacturing sector. Generally, the structural adjustment programme led to increase in nominal GDP. Table 1.4.2 presents the level and sectoral distribution of the country’s Real GDP between 1960 and 2010 48 Table 1.4.2: Nigeria Real Gross Domestic Product 1960-2010(Nmillion) Sectors 1960 1965 1970 1975 1980 1985 1 Agric 1, 599.8 1,742.2 1, 887.7 7,639.4 6,5018.8 65,748.4 Crop 1, 284.4 1, 366.2 1,437.0 4,942.8 3,944.7 52,750.9 Livestock 139.6 158.0 143.8 973.1 1,557.1 8,856.2 Forestry 131.8 143.4 129.2 320.5 270.7 2,310.9 Fisheries 44.0 74.6 177.7 1, 403.1 729.4 1,830.4 2. Industry 145.6 370.8 819.1 7,463.0 10,922.9 85,097.4 CrudePetr.&gas 11.0 116.8 465.6 5,770.6 6,754.3 72,152.0 Solid Minerals 20.6 33.0 35.9 505.9 682.7 913.0 Manufacturing 114.0 221.0 317.6 1,186.5 3485.9 12,032.4 3. Building & 110.8 162.2 221.0 1,932.5 3,056.0 3,308.0 Construction 4. Wholesale and 309.4 418.4 512.9 5,718.9 6,318.0 27,876.7 Retail Trade 5. Services 323.4 453.2 778.3 4,418.3 4,748.1 19,005.7 Total GDP 2,489.0 3,146.8 4,219.0 27,172.0 31,546.8 201,036.3 Sectors 1990 1995 2000 2005 2008 2010 1. Agric 83,344.6 96,220.7 117,945.1 233,463.6 283,175.4 316,728.7 Crop 68,416.7 80,702.8 98,392.6 206,178.4 252469.7 282,049.7 Livestock 9,562.0 10,051.3 11,449.9 14,643.9 17,877.6 20,264.1 Forestry 2,149.1 2,421.9 2,555.5 3,005.4 3,587.5 4,019.3 Fisheries 4,216.8 3,044.6 5,547.1 7,636.0 9,240.5 10,395.6 2. Industry 115,591.4 108,162.7 121,756.6 159,161.4 146,519.6 157,905.0 Crud.Petr.& gas 100,223.4 93,536.7 106,827.5 136,345.5 116,594.6 122,957.9 Solid Minerals 665.6 789.8 970.2 1,510.8 2,118.3 2,665.8 Manufacturing 14,702.4 13,836.1 13,958.8 21,305.1 27,806.8 32,281.3 3. Building & 4,350.8 5,221.7 6,433.8 8,544.5 12,338.8 15,484.9 Construction 4. Wholesale and 35,837.7 38,310.1 43,161.9 77,283.1 117,002.9 145,034.5 Retail Trade 5. Services 27,425.6 32,492.3 39,881.5 85,478.8 113,165.8 140,372.6 Total GDP 267,550.0 281,407.4 329,178.7 561,931.4 672,202.6 775,525.7 Source: Central Bank of Nigeria, Statistical Buletin, Golden Jubilee Edition, 2008; National Bureau of Statistics, Statistical Bulletin, 2010 compilled edition 49 *Note that the GDP was compiled from 1960-1973 using 1962/1963 constant basic price, from 1974-1980 using 1977/1978 constant basic price and from 1981-2010 using 1990 constant basic price It is apparent from Table 1.4.2 that Nigeria’s total GDP using 1962/63 constant basic price was N2.5 billion at independence in 1960. This figure consistently rose to N4.2billion in 1970 and N31.5 billion in 1980. In 1990, the total GDP value amounted to N267.6 billion and by 2000 the total GDP valued at 1990 constant basic price was N329. 2 billion. This has recently surged to N775. 5 billion in the year 2010. Out of this total, agriculture accounted for more than 40 percent in most of the period of analysis, constituting agriculture to be the largest contributor to Nigeria’s output of goods and services. Although in relative terms the contribution has fluctuated over time and its contribution in recent time was not as much as its contribution at independence. Crude oil sector accounted for about 21.4 percent in 1980. In absolute terms, this contribution rose to N106.8 billion in 2000. This represents about 33.3 percent for that year. It is also apparent from Table 1.4.2 that significant contribution to the GDP in 2000 came from wholesale and retail trade and this increment was sustained till 2010. Significantly, less contribution were made by the solid minerals and the manufacturing subsector of the industrial sector over the years although the industrial sector as a whole witnessed increasing contribution through the crude petroleum and gas subsector. It is important to note that the service sector as a whole recorded substantial improvement from 1995 till 2010 but relatively small compare to other main sectors. The contribution of the building and construction sector has remained minimal in relative terms throughout the period of analysis. Fig. 1.4.1: Sectoral Distribution of GDP 1999-2008 Sectoral Distribution of Gross Domestic Product, 1999 - 2008 16.5% crop production Other Agriculture 36.9% Manufacturing 23.2% Wholesale and Retail Trade Oil and Gas 4.6% Others 3.9% 14.2% Source: National Planning Comisssion (2009) 50 Okuneye and Ayinde (2011) stated that the Civil War (1967-70) and the emergence of petroleum in the early 1970s scuttled the production foundation of agriculture through lack of visionary planning for sustainable development. The sector is yet to regain its central role in the economy. The misfortune is that, based on the voluminous human, material and financial resources expended on agriculture in the last 40 years, the country ought to have done much better to address the fight against the mysteries of poverty, hunger, malnutrition and ill-health. The oil boom of the early 1970s relaxed the financial constraints to development. The GDP at 1977/78 factor cost grew at an average rate of only 5.0% per annum between 1975 and 1980. One major characteristic of this growth was its very unstable nature. The growth rates ranged from -1.3% in 1975/76 to 9.5% in 1979/80. Generally, government services recorded the highest growth of 17.7% in constant terms during this period. Manufacturing grew at 13.3%, while agriculture recorded a growth rate of -2.3%. The performance of the economy suggests that there was more to underdevelopment than financial constraints. The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. In 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of Federal Government revenue. In recent time, mining constitutes the country’s major source of wealth accounting for slightly less than 20percent of the GDP above 90percent of Nigeria’s foreign exchange earnings and about 80 percent of the country’s revenue. The crude oil industry is capital intensive. This explains why there is not much prospect in this industry in terms of providing employment opportunities for its labour force due to its relatively low labour absorptive-capacity. Currently, this industry provides employment for about two percent of the country’s labour force. New oil wealth, the concurrent decline of other economic sectors, and a lurch towards a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2000, Nigeria's per capita income had plunged to about one

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