EXECUTIVE SUMMERY

Nigeria is the most populous country in Africa and is the eighth most
populous country in the world. It is a country with huge oil wealth yet
half the population still lives on less than $1 a day and one in five
children dying before the age of five. The obstacles preventing sound
economic development in the country are huge. Oil wealth has
distorted the economy and has discouraged growth in other sectors.
Oil based Industrial transformation ignoring the development of
outstanding Agricultural sector made Nigeria a net importer from a net
exporter of food items. Besides Competition for a share of oil wealth
dominates politics, feeds corruption, and diverts attention away from
improving governance, management of public finances and delivery of
basic services, all of which suffered during 30 years of military rule.
Religious and ethnic diversity contribute to regional disparities in
wealth and sometimes give rise to conflict and violence. Following
years of economic stagnation, Nigeria embarked on a comprehensive
reform program during the second term of the Obasanjo
administration. The program was based on the National Economic
Empowerment and Development Strategy (NEEDS) and focused on
four main areas: improving the macroeconomic environment, pursuing
structural reforms, strengthening public expenditure management, and
implementing institutional and governance reforms. The paper
reviewed the stages of economic development, tried to find out the
major impediments rooted in Nigeria which have been deterring the
growth of a resource blessed country like Nigeria.

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 INTRODUCTION
In Sub-Saharan Africa, Nigeria is the second largest and the biggest
economic power with an annual growth rate of 6 per cent witnessed
between 2001 and 2008. It is generating two-thirds of the region’s
Gross Domestic Product (GDP). It is also Africa’s most populous
country. Until the current global economic crisis began to affect the
economy seriously towards the end of last year, the country had
achieved unprecedented macroeconomic stability. However, the high
growth rates do not seem to have translated into equitable distribution
of wealth. The government has been quite concerned with these poor
outcomes which indicate increasing commitment of the government to
a broader poverty reduction, social protection and human development
agenda. Positive results can already be seen in the trend of the Human
Development Index (HDI) rate of growth from 0.490 through 0.494 to
0.499 and 0.513 (NBS) in 2004, 2005, 2006 and 2008, respectively,
placing Nigeria in the lead of low HDIs in the global UNDP HDI ranking.
More achievements in growth should push Nigeria into the medium HDI
countries.

NIGERIA: GEOGRAPHY AND HISTORY

Nigeria is located on the west coast of the African continent and is
bounded on the south by the gulf of guinea, on the east by Cameroon
and Chad, on the north by Niger and on the west by Benin, the most
populous country in Africa, Nigeria accounts for one in five of sub-
Saharan Africa’s people. Although fewer than 16% of Nigerians are
urban dwellers, at least 24 cities have populations of more than

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100000. The varieties of customs, languages, and traditions among
Nigeria’s 250 ethnic groups give the country a rich diversity.
The dominant ethnic group in the northern two-third of the country is
the Hausa Fulani, most of whom are Muslims. Other major ethnic
groups of the north are the Nupe, Tiv, and Kanuri. The Yoruba people
are predominant in the southwest. About half of the Yorubas are
Christian and half Muslim, like the population as a whole. The Ibos,
primarily catholic are the largest ethnic group in the southeast.
Persons of different language backgrounds ordinarily communicate in
English, although knowledge of two or more Nigerian languages is
common. Hausa, Yoruba and Ibo are the most widely used.

Table 1. Geographic, Social, and Economic Indicators at a glance

Capital: Abuja
Area: 923,768 km2
Population: 127 million (2000)
Population (annual growth rate): 2.8% (1990—2000)
GNI per capita: U.S. $260 (2000)
GNI per capita (PPP): U.S. $790 (2000)
GDP per capita (average annual growth -0.4% (1990—2000)
rate): 39% (2000)
Agriculture as share of GDP: 17%(2000)
Exports as share of GDP: 151(1999)
Under age 5 mortality rate (per 1,000 39% (1997)
live births): 36% (1997)
Child malnutrition (underweight): 37% (1999)
Females as share of labor force:
Illiteracy rate (age 15+):

AGRICULTURE

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Agriculture has suffered from years of mismanagement, inconsistent
and poorly conceived government policies, and the lack of basic
infrastructure. Still, the sector accounts for over 26.8% of GDP and
two-thirds of employment. Agricultural products include cassava
(tapioca), corn, cocoa, millet, palm oil, peanuts, rice, rubber, sorghum,
and yams. Although overall agricultural production rose by 28 percent
during the 1990s, per capita output rose by only 8.5 percent during the
same decade. Agriculture has failed to keep pace with Nigeria’s rapid
population growth which labeled the country as a net importer in
where it was a highest net exporter of cocoa, palm oil and peanuts.

INDUSTRY

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.
Nigeria is the 12th largest producer of petroleum in the world and the
8th largest exporter, and has the 10th largest proven reserves. The
country joined OPEC in 1971. Petroleum plays a large role in the
Nigerian economy, accounting for 40% of GDP and 80% of Government
earnings.

Nigeria has one of the fastest growing telecommunications markets in

the world, major emerging market operators like MTN, Etisalat, Zain
and Globacom, basing their largest and most profitable centers in the
country. The government has recently begun expanding this
infrastructure to space based communications. Nigeria also has a wide
array of underexploited mineral resources which include natural gas,
coal, bauxite, tantalite, gold, tin, iron ore, limestone, niobium, lead and

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zinc. Despite huge deposits of these natural resources, the mining
industry in Nigeria is still in it infancy.

SERVICES

Nigeria is ranked 63rd worldwide and fifth in Africa in services' output.

Low power and telecom density has crippled the growth of this sector.
Since undergoing severe distress in the mid-1990s, Nigeria's banking
sector has witnessed significant growth over the last few years as new
banks enter the financial market. Private sector-led economic growth
remains blocked by the high cost of doing business in Nigeria,
including the need to duplicate essential infrastructure, the threat of
crime and associated need for security counter measures, the lack of
effective due process, and nontransparent economic decision making,
especially in government contracting. Meanwhile, since 1999 the
Nigerian Stock Exchange has enjoyed strong performance, although
equity as a means to foster corporate growth remains underutilized by
Nigeria's private sector.

STAGES OF ECONOMIC DEVELOPMENT

The history of Nigeria’s economic development can be divided into 2
period-Military Era and Obasanjo Administration. Military era endures
30 years, 1960-1999 and Obasanjo has still been ruling since 1999.
The endeavor of economic development during Military era can be
characterized by oil-based industrial development, severe corruption,
mismanagement, inequality and abandon of agricultural sector. The
true comprehensive economic reform has been taken place during the
second Obasanjo Administration.

NATIONAL DEVELOPMENT PLAN

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After the Independence, Nigeria adopted First National Development
Plan(1962-68) charted Nigeria's transition from an essentially
agricultural economy to a mixed economy based on agricultural
expansion and limited industrial growth. These plans included
economic forecasts, policies toward the private sector and a list of
proposed public expenditures but did not constitute commitments by
public departments to spend funds. They discouraged increased taxes
on the wealthy and advocated a conservative monetary and fiscal
policy emphasizing a relatively small plan, openness to foreign trade
and investment, and reliance on overseas assistance. Foreign aid was
set at one half of public sector investment. Development plans were
instituted in 1970 and 1975, but the goals set in all three plans proved
unrealistic.

STRUCTURAL TRANSFORMATION: FLOURISH OF OIL INDUSTRY

During the late 1960s, oil had replaced cocoa, peanuts, and palm
products as the country's biggest foreign exchange earner. In 1971
Nigeria--by then the world's seventh-largest petroleum producer--
became a member of the Organization of the Petroleum Exporting
Countries (OPEC). Between 1970 and 1974 Nigeria’s real growth in
GDP was 12.3 percent per year in where target had been only 6.2
percent. Rapid oil industry growth and Sharpe increase in oil prices was
the main factors for Nigerian growth. In 1974 the dramatic rise in oil
price brought huge amount of wealth described as "dynamic chaos."
Substantial portion of revenue was intended for investment to diversify
the economy. But this large amount of wealth spurred inflation and
eventually widespread unemployment, underscored inequities in
distribution. In 1975 production fell sharply as a result of the sudden
decrease in world demand, and prices moved downward until late in

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the year when OPEC intervened to raise prices. Nigeria fully supported
OPEC policies.

UNPLANNED PROJECT TAKING

Amid the euphoria of the 1974 oil price boom, the Ministry of Economic
Development of Nigeria approved and added numerous projects for
other ministries not supported by a proper appraisal of technical
feasibility, costs and benefits, or the technical and administrative
arrangements required to establish and operate the projects and
necessary coordination and implementation were ignored. These
projects were accepted for political reasons, not because of their social
or economical importance by the Central Planning Office of the
Supreme Military Council.

IGNORANCE TOWARDS AGRICULTURAL SECTOR AND ITS

IMPACT

Nigeria was heavily dependent on agriculture, with the sector

accounting for more than 40 percent of pre-1973 GDP. But in the
decade up to 1983, agricultural output in Nigeria declined 1.9 percent
and exports fell 7.9 percent. Agricultural imports as a share of total
imports rose from 3 percent in the late 1960s to 7 percent in the early
1980s. Nigeria's unfavorable agricultural development resulted from
the loss of competitiveness among farm exports as the real value of
the Nigerian naira appreciated substantially from 1970 to 1972 and
from 1982 to 1983.

IMPLEMENTATION OF THREE YEARS ROLLING PLAN

In late 1989, the concept of a fixed five-year plan was abandoned and
instead, a three-year "rolling plan" was introduced for 1990-92 in the
context of more comprehensive fifteen- to twenty-year plans. A rolling

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plan, considered more suitable for an economy facing uncertainty and
rapid change, is revised at the end of each year, at which point
estimates, targets, and projects are added for an additional year. In
Nigeria, the objectives of the rolling plan were to reduce inflation and
exchange rate instability, maintain infrastructure, achieve agricultural
self-sufficiency, and reduce the burden of structural adjustment on the
most vulnerable social groups.

OUTCOME OF POOR ECONOMIC PERFORMANCE

Nigeria’s economic performance during military era was generally poor

due to over emphasis on oil industry, ignorance of development of
Agri-sector, mismanagement of public spending and corruption and
ethnic conflict. Over the period 1992 to 2002, annual GDP growth had
averaged about 2.25 percent. With an estimated population growth of
2.80 percent per annum, this implied a contraction in per capita GDP
over the years that had resulted in a deterioration of living standards
for most citizens. Inflation levels were high, averaging about 28.94
percent per annum over the same period.

Figure 1: Real GDP Growth and Inflation (1992-2002)

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 Source: IMF (2005; 2003; &2001)

DEBT RELIEF
In September 2005, Nigeria received the biggest ever debt relief
package from the so called “Paris Club”—an informal group of the
world’s richest countries, including the UK. The debt relief deal was
worth $18 billion and represented a reduction of about 60% of
Nigeria’s overall debt to the Paris Club of about $30 billion of which
annual return was $100 billion. The UK’s share of the debt relief was
£2.85 billion. Nigeria’s external debt now stands at less than 4% of
GDP.

REFORM INITIATIVE- HOMEGROWN STRATEGY

On May 29, 1999, Nigeria returned to full democratic governance.
Following years of economic stagnation, the second Obasanjo
administration (2003 – present) embarked on a comprehensive
economic reform program based on a homegrown strategy. The
program was based on the National Economic Empowerment and
Development Strategy (NEEDS) and focused on four main areas:

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 • Improving the macroeconomic environment,
• Pursuing structural reforms,
• Strengthening public expenditure management,
• Implementing institutional and governance reforms.

IMPROVING THE MACROECONOMIC ENVIRONMENT

A major challenge for the Nigerian economy was its macroeconomic
volatility driven largely by external terms of trade shocks and the
country’s large reliance on oil export earnings. By some measures,
Nigeria’s economy ranked among the most volatile in the world for the
period 1960 to 2000. The central objectives of the macroeconomic
reform were
• To stabilize the Nigerian economy
• To improve budgetary planning and execution by de-linking
public expenditures from oil revenue earnings by introducing an
appropriate fiscal rule.
• To provide a platform for sustained economic diversification and
non-oil growth.

An oil price-based fiscal rule was introduced in which government

expenditure was based on a prudent oil price benchmark. Any
revenues that accumulated above the reference prices were saved in a
special excess crude account. Adoption of this rule has ensured that
government expenditures are de-linked from oil revenue earnings,
thereby limiting the transmission of external shocks into the domestic
economy. There was a marked improvement in the government’s fiscal
balance. The implementation of monetary policy was similarly fairly
disciplined, with the central bank adhering to various monetary targets
and reducing inflation. The attainment of macroeconomic stability has
provided a platform for improved growth performance. in recent years.

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Growth rates have averaged about 7.1 percent annually for the period
2003 to 2006. This is a notable improvement on the performance over
the decade before reform when annual growth rates averaged about
2.3 percent. More importantly, the recent strong growth rates have
been driven by strong growth in the non-oil sectors, which is needed
for employment creation. This reform complemented by improvements
in debt management and the budget preparation process.

Figure 2: Selected Economic Indicators

Source: CBN, 2006b; Federal Ministry of Finance (Nigeria), and IMF

(2001; 2003; 2005)

STRUCTURAL REFORMS
A broad range of structural reforms has been taken to improve the
domestic business climate and enhance competitiveness, to
deregulate and reduce government activity in various economic
sectors and to address various structural constraints to growth. Four
major areas of recent structural reform was

PRIVATIZATION:
• Between 1999 and 2006, about 116 enterprises were privatized,
including various loss-making government enterprises operating

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 in industries such as aluminum, telecommunications,
petrochemical, insurance, and hotel.
• Unbundling of the Power Holding Company of Nigeria (PHCN)
into18 companies responsible for power generation,
transmission, and distribution.
• An increase in the number of telephone lines in the country from
about 500,000 landlines in 2001 to over 32 million GSM lines at
present. The sector has attracted over US$1 billion a year in
investments in the past four years and Nigeria has been rated as
one of the countries with the fastest growing tele-density in the
world.

THE CIVIL SERVICE

• Redundancy packages and retraining programs were offered to
severed staff. A total of 35,700 officials have been severed from
the civil service at an estimated cost of about N26 billion
(US$203 million), while 1,000 high flying university graduates are
being recruited.
• Reviewing of Government pay scales recommended public sector
wage increase of 25 percent in 2007 and a further 10 percent in
2008.
• Government payroll systems are being computerized with the
introduction of an Integrated Personnel and Payroll Information
System (IPPIS) to assist in monitoring staffing numbers in the
federal civil service.

THE BANKING SECTOR

To strengthen the financial sector and improve availability of domestic
credit to the private sector, a bank consolidation exercise was
launched in mid-2004 which has adopted the following measurements

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 • The Central Bank of Nigeria requested all deposit banks to raise
their minimum capital base from about US$15 million to US$192
million by the end of 2005.
• Implementation of the consolidation exercise triggered mergers
in the banking sector and reduced the number of deposit banks
in Nigeria from 89 to 25.
• Reform of the banking and insurance sector is complemented by
improved regulatory oversight of the central bank.

TRADE POLICY
• Nigeria liberalized its import tariff regime by adopting the
Common External Tariff (CET) of the Economic Community of
West African States (ECOWAS).

INSTITUTIONAL AND GOVERNANCE REFORMS

PUBLIC PROCUREMENT
Introduction of Due Process mechanism in public contracts has
promoted an open tenders process with competitive bidding for
government contracts and notable improvement in the efficiency of
capital spending..

PUBLIC EXPENDITURE MANAGEMENT

To improve transparency at all levels of government, a monthly
publication of federal, state, and local government shares of revenue
from the country’s federation account was introduced in January 2004.
The publication has increased transparency, particularly of sub-
national finances, and opened up dialogue on public revenues and
expenditures at all tiers of government.

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THE OIL AND GAS SECTOR AND THE N-EITI INITIATIVE
In 2003, Nigeria was among the first countries to adopt the Extractive
Industries Transparency Initiative (EITI) to help improve governance of
the sector. President Obasanjo personally enrolled the country in the
initiative. One of the key acts of the EITI aimed at improving
transparency was to commission an independent audit of the oil and
gas sector from 1999 to 2004.

PROSECUTING CORRUPT PRACTICES

Finally, the government introduced two institutions to tackle corruption in
the domestic business environment. The Economic and Financial Crimes
Commission (EFCC) and the Independent Corrupt Practices and other
Related Offenses Commission (ICPC) are pursuing cases of corrupt
practices such as Internet fraud and corruption in public office.

GLOBAL RECONOMIC CRISIS, 2009

REDUCTION OF OIL PRICE IN 2009 AND AFTERMATH

Nigeria has also been hard hit by the global economic downturn
though they have already adopted a fiscal policy which was delinked to
oil revenue fluctuation. The resulting reduction in world oil prices
leaded to a fall from a peak of $147 a barrel in July 2008 to a low of
$40 in early 2009. This has been compounded by a fall in output
arising from increased instability in the oil-producing Delta region.
Monthly oil revenue fell to $1 billion in January 2009 from an average
of $2.2 billion in 2008. The global economic crisis has heightened the
challenges to growth, development and poverty reduction which
Nigeria already faced and truly still emanates from within Nigeria.
These challenges are demonstrated at their most extreme in the Niger
Delta where criminality, political power struggles and genuine

14
grievances of local people about lack of basic services all interact,
fuelling violence and insecurity.

OBSTACLES TO THE DEVELOPMENT OF NIGERIA

INADEQUETE INFRASTRUCTURAL FACILITIES

The inadequacy of infrastructure to support provision of basic services
is a major obstacle to growth in Nigeria. The problem in power sector is
substantial. For its 150 million people, Nigeria manages to generate
around 1,800-2,000 megawatts (Mw) of electricity. By comparison,
South Africa has a generation capacity of 45,000 Mw for its population
of 48 million. Lagos is a vibrant and dynamic city which contributes
12% of Nigeria’s GDP. It is also chaotic: its infrastructure was designed
for 1 million people but supports a population of 15 million which is
expected to reach 20 million by 2010 and become one of the ten most
populated cities in the world.

POOR PROVISION OF BASIC SERVICES

55% of Nigeria’s population lives on less than $1 a day; 29% of
children are underweight; less than half the rural population has
access to a safe water supply. The World Health Organisation (WHO)
has ranked the Nigerian health system 187th out of 191 member
states. Nigeria is off-track on all the health-related MDGs. Child and
maternal mortality rates are extremely high, especially in the north of
the country. One in every five children dies before the age of 5. Only
20% of children are fully immunized. Nigeria is also only one of only
four countries globally where the polio virus is still circulating. Nigeria
remains off-track on both education MDGs (achieving universal basic
education and eliminating gender disparity in primary and secondary

15
education). Nigeria has the most primary age children “out of school”
of any country in the world, currently estimated at 8 million. The
primary education net enrolment rate is around 63% and has improved
only a little in the last decade.

INEFFICIENT GOVERNANCE
One of the major challenges to Nigeria realizing its full potential is
weak governance. Nigeria was under military rule for more than 30
years between 1967 and 1999. Civilian rule was re-established in 1999
when President Obasanjo was elected. The legacy of military rule is
institutional weakness and lack of capacity at all levels. There is a very
low base of public finance management skills and no cadre of
experienced civil servants. When civilian rule began again in 1999,
some states had no budgeting system in place because military
governors had felt no need for them. Governance structures have been
corroded and systems for basic service delivery and infrastructure are
lacking. Nigeria has a federal structure has contributed to the survival
of Nigeria as a cohesive nation. The State governments spend 50% of
public funds and have a high degree of autonomy. States are not
required under the constitution to account to the Federal Government
for the use of the funds allocated to them. The quality of State and
local governments varies but is assessed as being characterized by
particularly weak institutional capacities. The Country Partnership
Strategy identifies the main deficiencies in government as:
• Limited transparency and accountability in public resource
management at all levels of government, exacerbated by weak
sanctions
• Low capacity of the civil service to implement programmes
• An ineffective judicial system
• Limited effectiveness of State assemblies

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 • An absence of social accountability mechanisms to give voice to
citizens’ views on government services.

HEAVY DEPENDENCE ON OIL

Nigeria is a classic example of a resource-dependent developing
country. The discovery of oil in the 1960s, and the subsequent
mismanagement of the revenues have had a profound impact on
economic growth, the political economy and on the relationship
between citizen and state. Nigeria’s oil resources turned into “oil
curse” as the cause of its many years of political and economic
instability including 30 years of military rule. Oil provides 85% of
government revenue and over 95% of export earnings but it provides
few jobs for Nigerians: it accounts for around 40% of GDP, but employs
less than 1% of the workforce.. The World Bank points to systematic
and prolonged mismanagement of oil revenues, which has fuelled
corruption, undermined trust and ultimately held development back.
There is a pervasive view that the country has been blessed with oil
and that there is therefore no need to do anything else to generate
economic activity. In 2006, estimated GDP was over $100 billion but
this equates to less than $800 per capita.

HIGH SCALE OF POVERTY

Nigeria’s population was estimated to be 148 million in 2007 with a
growth rate of over 2.8%. Although recent World Bank statistics show
an improvement in per capita GNI from $270 in 2004 to $920 in 2007,
more than half the population lives in poverty. 20% of Africa’s poor
people live in Nigeria.

CORRUPTION

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Corruption is as being “endemic” at every level of government in
Nigeria and across society more broadly. An estimated 60% of public
procurement expenditure was lost to corruption.

INTENSE ETHNIC POLARIZATION AND CONFLICT

Nigeria is a diverse and complex country as well as a large one. The
north of the country is mainly Islamic and the south Christian. Nigeria
has 200 ethnic groups and 500 indigenous languages. These are
divided into ethnic “majorities” and “minorities”. Ethnic divisions
contribute to disparities in wealth and access to services. Ethnic and
religious differences can also lead to conflict and violence. In July 2009,
hundreds of people died in three northern Nigerian states when
followers of a radical Islamic cleric were involved in armed clashes with
security forces.

NIGERIA’S REGIONAL AND GLOBAL

SIGNIFICANCE
Nigeria is the second largest economy in sub-Saharan Africa (after
South Africa) and the biggest economic power in West Africa,
generating two-thirds of the region’s Gross Domestic Product (GDP). It
is Africa’s most populous country. Nigeria is a leading member of the
Commonwealth, the New Partnership for Africa’s Development
(NEPAD) and the Economic Community of West African States
(ECOWAS). It is also a major contributor to peace-keeping in Africa. The
World Bank describes Nigeria as “a regional giant” and says that if it
could increase its growth and prosperity and make more progress
towards the Millennium Development Goals (MDGs), this “would
translate to gains in social and economic progress for the whole region.
the World Bank assess that Nigeria’s role in strengthening regional
integration, its efforts at financial market integration, at ports and

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customs modernisation, to improve access to energy and sustainable
land and water resources, and to align trade regimes to regional
agreements are all important for the region’s development.
Nigeria is Africa’s largest oil producer and the tenth largest oil
producer in the world. However, corruption and poor governance
hamper the right channelization of the resources and being translated
into benefits for the poor. Moreover, a recent report from the UN Office
on Drugs and Crime found that the present instability in the oil-
producing Niger Delta was the “greatest rule of law challenge”
confronting the West Africa region. It directly de-stabilizes the most
powerful economy in the region, with implications far beyond the Niger
Delta.

FUTURE DEVELOPMENT TARGET OF NIGERIA

GROWTH WITH EQUITY
In the evolution of development thought and practice, two key
questions have remained prominent: what is the most appropriate
objective of economic development, and how can this objective be
achieved? Viewing per capita income growth as the key objective
served as the starting point, but it has been under sustained
questioning almost from the very beginning. In the 1970s.a new wave
of development thinking generated the “basic needs” approach. In re
thinking the key objectives of economic development, improvements in
human development, especially infant mortality, life expectancy,
literacy and gender empowerment have emerged as key elements of
the appropriate fundamental objectives of development. The process
has culminated in the widely accepted emphasis on human
development whose main components are today encapsulated in the
Millennium Development Goals (MDGs) s.

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Income growth is viewed as the necessary engine (or means to an end)
and human development is seen as the ultimate, objective; while the
two-way linkages suggest that income growth enables improvements
in key components of human development and these, in turn, promote
further growth in income. More specifically, improvements in human
development (through, for example, better health and more education)
increase labour productivity which in turn, raises both output and
income on the hand ; while economic growth increases both private
and public resource that can be applied to raise the level of human
development on the other. Policies to achieve growth and equity
1. create an environment for high levels of investment and growth
2. promote human capital development
3. step up investment in rural areas
• develop rural infrastructure
• promote opportunity by raising the returns to labour
• create employment in the rural economy

TREND: POVERTY AND INEQUALITY IN NIGERIA

INEQUALITY
Many studies have shown that despite its vast resources, Nigeria ranks
among the most unequal countries in the world. The poverty problem
in the country is partly a feature of high inequality which manifest in
highly unequal income distribution and differential access to basic
infrastructure, education, training and job opportunities. Inequality
between genders stands out as a key challenge. The female gender is
generally disadvantaged in access to education and employment, as
well as in agricultural wage and access to land among other things.
Evidence abounds that gender inequality affects the growth and

20
perpetuates poverty among the disadvantaged groups. Clearly
inequality hurts the economy and women and girls in particular.

POVERTY
The number of poor people in Nigeria remains high. The total poverty
head count rose from 27.2% in 1980 to 65.6% in 1996, an annual
average increase of 8.83% in the 16 year period. However, between
1996 and 2004, total poverty head count declined by an annual
average of 2.1% to 54.4%. over the same period, the percentage of
population in the core poor category rose from 6.2 to 29.3% before
declining to 22.0% in 2004. the fact that over 50% of the total
population is officially poor should be major concern to policy makers.
Key correlates of poverty in Nigeria include education, occupation, age,
gender and household size. The following table shows the key
determinants of poverty.

Table 2: Determinants of Poverty in Nigeria

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Source: Computation based on National Living Standard Survey 2004 and
2008/9 Human Development
Report Team (NBS)
CAMPARISION: BANGLADESH VS. NIGERIA

This section of the study will provide a comparable assessment of the

extent of economical development of Bangladesh and Nigeria. Both
Bangladesh and Nigeria is mostly destitute country in their respective
continent though they are blessed with many natural resources and
human capital. The interesting thing was that both country hold almost
similar characteristics of least developing country just differ in intensity
of those characters. The following in-depth analysis will support in
generating a framework for reform by pointing out the major
discrepancy in the way of economical development, for both
Bangladesh and Nigeria.

Table 3: Comparable data between Bangladesh and Nigeria

Bangladesh Nigeria
Criteria
2000 2000
Population 130 m 128 m
Area 143988 km2 923768 km2
GNP per capita 380 $ 260 $
GNP (PPP) $ 1650 $790
Avg. Annual Growth 3.2% -0.4%
Agriculture as share of GDP (1990-2000) 26% 39%
Export as share of GDP 12% 17%
Life Expectancy at birth 61 47
Under age 5 mortality rate (in 1000 live birth) 89 151
Child malnutrition (Underweight) 56% 39%
Illiteracy rate 59% 37%
Female as share of labour force 42% 36%
HDI 0.470 (low) 0.455 (low)
GINI 0.336(1996) 0.506 (1996)

Bangladesh is located on the Tropic of Cancer in South Asia. It has the

world highest annual rainfall, which affects the topography and the

22
location of economic activities. Much of the territory is partly sub
merged or subject to flooding during the rainy season, and the
cultivation of rice and jute employs a very large portion of the
workforce. Bangladesh is the most densely populated agricultural
nation in the world, with 130 million people in 2000. It is also one of
the poorest and least developed in Asia, with a 2000 per capita GNP of
only $380, a life expectancy of 61 years, and a literacy rate of below
30% for women. Its labor force is expanding rapidly as a result of high
population growth rates, and unemployment and underemployment
currently exceed 20%. Although its income is more evenly distributed
than in many other LDCs, because of its very low per capita income,
Bangladesh has a high poverty rate (40% in rural areas in 1995).

POPULATION SIZE AND GROWTH

Both Nigeria and Bangladesh has highest populous country in their
respective continent, Africa and Asia and poorer than china and India;
130 million live in Bangladesh and 127 million in Nigeria. Although
these countries are closely ranked in income as recently as the early
1990s, Bangladesh is now pulled ahead. Active family planning
programs have had the effect of drastically lowering the birthrate over
the last decade helping spur development in Bangladesh. Nigeria’s
current growth rate of almost 3% per annum that adds about 3.7
million people every year. If population growth is not reduced Nigeria
will have a population in excess of 150 million by the year 2010 and
200 million by 2025.

GEOGRAPHICAL POSITION AND RESOURCE

CONCENTRATION
Nigeria has favorable geographical position and resource concentration
comparing to Bangladesh. It has tremendous oil resource and

23
agricultural resource like pulp products, cocoa and peanut. On the
other hand Bangladesh is located on the Tropic of Cancer in South Asia
and has the world highest annual rainfall. The problems of the poor in
Bangladesh are exacerbating by their weather conditions: feminine,
floods from excessive monsoon and the average of 16 cyclones each
decades. Bangladesh is one of the countries most threatened by rising
world sea levels resulted from global warming.

DIVERSITY IN ETHNICITY
The varieties of customs, languages and traditions among Nigeria’s
250 ethnic groups give the country a rich diversity but often create
conflict. In case of ethnic diversity Bangladesh enjoys special
advantages of a population homogeneous in ethnicity; religion and
language generate relative lack of civil strife.

GOVERNMENT AND POLITICAL ENVIRONMENT

Both countries have had authoritarian government plagued by
inefficiency and corruption that hinder their proper development
process. But comparing the two countries, Bangladesh must be kept
ahead as Government of Bangladesh extend their support to promote
innovate capacity, an openness to new idea for the poorer and creative
interchange between nongovernmental groups and governmental
agencies. But in both countries unstable political environment hinder
growth opportunity, raise corruption and magnify economic
mismanagement in a significant extent.

INDUSTRIAL SECTOR AND AGRICULTURAL SECTOR

Nigeria has been more a case of modern sector enrichment with some
modern sector enlargement comparing to Bangladesh. But the
structural modification proved to be more stable in Bangladesh than

24
Nigeria. A combination of declining oil prices, overly ambitious
industrialization program, neglect of the agricultural sector, excessive
foreign borrowing and widespread economic corruption and
mismanagement caused the Nigerian economy to experience a
prolonged period of economic stagnation and decline. Modern sector
enlargement growth has been in the Bangladesh textile and Garment
industries also traditional sector enrichment growth has been aided by
the policies and cooperation of public sector and private sector has
enabled over 2 million poor Bangladeshis to start their business.
EXPORT AND IMPORT
Both Nigeria and Bangladesh is experiencing high trade deficit. In
Bangladesh, the major export earnings come from Ready Made
Garments (RMG), Frozen Food, Tea, Jute etc and import electronic
goods. On the other hand Nigeria exports petroleum, cocoa and
tobacco. Nigeria was primarily the largest net exporter of cocoa, palm
oil and peanut but now Nigeria is a net importer country of food items
due their ignorance to agricultural sector for the development of only
oil based industrial sector.

PUBLIC EXPENDITURE AND INFLUENCE OF DONOR

AGENCY
In Bangladesh and Nigeira government is often being advised by donor
agencies to limit expenditure towards public sectors such as education,
health. For a poor economy like Bangladesh and Nigeria such
intervention is often detrimental and the effects can go long way. The
current per capita public expenditure in Bangladesh is only $90 which
is $200 in india and $168 in Srilanka which shows the degree of
suppression imposed by donor agency like IMF and World Bank.

LABOR FORCE AND UNEMPLOYMENT

25
Both Bangladesh and Nigeria is suffering severe unemployment and
lack of skilled labor. But Bangladesh has been adopting many
innovative as well as reality based project to improve the quality of
labor force and to generate more employment which is rarely found in
Nigeria. The innovative projects adopted by Bangladesh have been
pushing up the women participation in the labor force at a significant
degree. But the problems of poor women in Nigeria are overwhelming
which reduces their extent and quality of participation in the labor
force.

HEALTH SECTOR AND EDUCATION SECTOR

Life expectancy was also similar a decade ago but now Bangladesh has
commanding lead, at 61 against just 47 in Nigeria. Literacy is worse in
Bangladesh, with 74% of adult women and 51% adult men illiterate
comparing to appealing figures of 53% and 33% respectively in
Nigeria. Poverty is severe in Bangladesh with 29% living on less than
$1 per day and 78% on less than $2 per day. For Nigeria the figures
are 70% and 91%, respectively, while the urban rural disparities are as
shape as anywhere in the world. Malnutrition has been rising in rural
Nigeria; population growth has been increasing faster than food
production. Both Bangladesh and Nigeria has recently been engaged
in extensive “austerity” structural adjustment program but the
evidence suggested that Bangladesh has done more to break the fall of
the poor and that Nigeria, with more resources, could have done much
more than it did. The differences have been reflected in the courtiers
diverging performance.

INFRASTRUCTURAL DEVELOPMENT IN AGRICULTURAL

AREA

26
 In this point Bangladesh is not far from Nigeria but able to
differentiate herself in terms of various innovative projects taking
which allow her to improve its infrastructural support to agro based
area. The food for program (FFWP) which organizes and pays with food
for the construction and maintenance of agriculture-supporting
infrastructure, mainly irrigation, drainage and embankment works has
been a significance help to the poor. On the other hand Nigeria’s
poorly developed infrastructure for the agricultural areas, poor
clarification property rights and inefficient agricultural practice lag
them behind though here are no shortage of farmland.

CONCLUSION
Nigeria is country having a country with tremendous oil resource,
agricultural resources and still many concealed service and industrial
sector. If Nigeria is to turn the tide of its economic misfortune and
mismanagement, it will have to take steps to raise domestic food
production, labor productivity and rational as well as transparent use
oil revenue to diversify economic activity. Considerable focus need to
be deployed for the reduction of the burden of its foreign debt,
lowering population growth through a combination of effective family
planning program, improvement of rural health and education and a
reduction of its absolute poverty. The country also seek increased
foreign aids and investment including significant debt relief and must
make better use of market price incentive to allocate resources while
endeavoring to improve public and private decision making and
maintain political stability between rural ethnic and religious group.
Only then will Nigeria began to achieve its potential as the major
economic force on the African continent and a leader of the developing
country.

27
BIBLIOGRAPHY
Todaro, M.P., and Smith, S.C., (2008-2009), “Economic Development”

India: Pearson

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http://www.publications.parliament.uk/pa/cm200809/cmselect/.../840i.

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http://www.thestatesmanonline.com/pages/news_detail.php?

section=7&newsid=1363www.thestatesmanonline.com/pages/news_d

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