The history of Nigeria’s economy is complex, largely due to the country’s colonial era and its gradual recovery. However, looking at this history, the beginning of the colonial period seems an appropriate starting point. It is important to note that the arrival of missionaries from the British Church Missionary Society (CMS) in 1845 was aimed at achieving “economic and political dominance”.
The ostensible reason for the missionaries’ arrival was, of course, the desire to spread Christianity to new parts of the world. However, shortly after the CMS established its presence in what is now Nigeria, the colonial administration began hoarding the country’s raw materials; A “suitability search” system was developed with a new production policy designed to benefit the British people. In effect, this meant the creation of a new export-oriented economy, but one that was repressive and not designed to help the Nigerian workforce.
In the years following the introduction of this system, the country was initially governed by the Royal Niger Company and then divided into the Northern Nigeria Protectorate and the Southern Nigeria Protectorate. Despite these drastic changes in British control of the region, the economy changed relatively little during this period. Nigerian production consisted mainly of agricultural and mining activities and benefited the British. In fact, a similar situation existed even in 1914 when Britain unified the country.
At that time, Nigeria exported raw materials to Britain and Europe and imported consumer goods. Gradually, a vague economic hierarchy emerged with signs of the emergence of economic elites and investment practices. However, the opportunities for real development, diversification and industrialization of the economy remain limited.
Indeed, in the decades that followed, Nigeria’s predominant focus on agriculture increased and global conflicts limited import options for European countries. The Second World War in particular cut off suppliers of many raw materials from East and Southeast Asia, making Great Britain and other European countries even more dependent on Nigerian production.
After the end of the world wars, calls for independence gradually increased in Nigeria. Parallel to these appeals was a growing sense that a more modern economy could be built to benefit Nigerians rather than Europeans. Therefore, when Nigeria gained independence in 1960, some of the first major changes in the service of economic development were introduced.
More importantly, the new Nigerian government moved quickly to strengthen education, eventually creating an entirely new set of schools and universities in the 1960s and 1970s, resulting in a dramatic increase in admissions. This was done in part to reduce illiteracy and create a skilled and competent workforce. It is therefore not surprising that industrialization accelerated; Nigeria soon built and operated dams, supported large automobile factories, and hosted many new industries.
Following this initial shift in the priorities of the newly independent Nigeria, economic development in the 1970s and 1980s was represented by four elements. First, Nigeria remains a major agricultural country, producing valuable raw materials in both the agricultural and mining sectors and benefiting from its exports.
Second, Nigeria has continued to introduce new industries such as manufacturing and services to complement agriculture. Around the same time, the country experienced something of an oil boom that opened up new economic opportunities. Also, the government began to take a more aggressive approach to spending, even though the volatility of that approach kept no one in the dark about the state of the economy for decades.
As the transition period brought Nigeria closer to the beginning of the 21st century, the country embarked on a multi-year effort to develop strategies to modernize and diversify its economy. Three in particular have taken an ambitious and comprehensive approach to supporting positive change:
Fourth National Development Plan –– The Fourth National Development Plan was adopted in the 1980s as the fourth in a series of similar initiatives and aimed to increase incomes, reduce unemployment, increase the number of skilled workers, promote equality and to utilize new technologies and industries.
Nigeria Vision 2010 –– The idea behind this plan was to restore economic growth after the slowdown of the 1990s. Nigeria wanted to become a fully developed country, with a deadline of 2010 and a heavy reliance on the private sector for its economic growth. Overall, Vision 2010 was widely viewed as a failure, although it likely contributed to some growth in the industry.
Vision 2020 –– After the failure of Vision 2010, Nigeria launched a new version of the initiative with the aim of making its economy one of the 20 largest in the world by 2020. Once again it quickly became clear that this goal was unattainable for some. Vision 2020 has partially failed. However, this stimulated further diversification and growth of the economy.
This more or less brings us to the present, where Nigeria has a far more complex and diverse economy than at any time in its history. This economy is far from perfect, but there are three key areas where progress can be seen:
Self-sufficiency of citizens
Looking at Nigeria’s economic history, it was not long ago that the country’s citizens cared about production, profit and financial security. However, as the economy grows and develops, there are many signs that people are becoming more financially independent.
First, the 21st century has witnessed an increase in the GDP per capita and real wages of the average Nigerian (despite some ups and downs in recent years). Furthermore, with more money in their pockets, Nigerians are taking steps to secure their financial future.
Many people are investing through digital platforms that have started operating in the country and have made online index trading easier. This allows Nigerians to participate in the National Stock Exchange (NGX) and benefit from fast execution and instant payments to invest in and profit from assets they were previously unable to purchase. It is now known that citizens not only strive for financial growth, but also save more capital for the future. In a survey in fall 2023, more than 61% of respondents expressed a desire to achieve monthly savings.
In short, Nigerians are seeing a greater share of finance this century, and many are using it to invest and plan for the future.
Diversifications
The process of economic diversification in Nigeria has been ongoing for decades. In some ways, these efforts were even at the heart of the national development plans mentioned above, as well as Vision 2010 and Vision 2020.
There is no specific date as to when this process will ever be considered “complete” or “successful,” but it is clear that progress has been made. Nigeria’s latest GDP data shows that while agriculture remains the country’s most important economic sector, other sectors such as IT, manufacturing, trade, construction, mining, real estate and finance have become more important. This diversity is perhaps the clearest indicator that Nigeria has a modern economy today.
Reform Underway
The most important thing is that the economic reform is still ongoing. Additionally, instead of implementing vague long-term initiatives like Vision 2020, the current government is taking more practical steps to address negative issues and stimulate greater financial growth and equity. Last summer, the World Bank released estimates that some of these reforms could ultimately save Nigeria $5.In 2023 alone there will be 1 billion. This indicates a certain level of economic responsibility, which in turn can lead to greater prosperity and stability for the country.
All in all, the Nigerian economy has come a long and winding way since the colonial era. Today it remains imperfect; various initiatives have failed, and many have been written over the years about the country’s failure to realize its potential as Africa’s dominant economic power. However, at the same time, slow but steady improvements were observed. The economy is stronger and Nigerians are more self-sufficient than ever before in history.
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