The Nigerian economy: Agriculture and the livestock sector
For some years Nigeria has been seeking to achieve economic take-off by using her oil resources.1 The 1973�74 fourfold rise in oil prices enabled the Government to launch an ambitious investment programme.2 The principal aim of the Third Development Plan was to diversify the economy, which at that time was primarily based on oil and agriculture. Diversification was to be achieved by implementing industrial projects, and the initial aim was to set up the necessary economic infrastructure for industrialization and development. During the Third Plan, half of total Government investment expenditure, which rose rapidly, was devoted to infrastructure and industrial projects, leading to a high economic growth rate (8.5% per year, according to ILCA estimates).
Oil production, which began in earnest in the early 1970s, now stands at somewhat over 100 million tonnes Per annum. A total of 42.000 million naira were scheduled for investment during the Third Development Plan covering the period 1975�80. On the basis of official exchange rates the average value of the naira is US $1.55
Growth components in Nigeria, 1970–1978.
Non oil sector
e. ILCA estimate
a. Manufacturing ind., building and public works, services
Source: Ref. 4.10.11
Growth has mainly affected the secondary and tertiary sectors. The building and public works sector, which had already made rapid strides forward between 1970 and 1974, is growing by over 25% per year (ILCA estimate), allowing even more rapid growth in the transport sector: over 30% annually, according to ILCA estimates. Growth in the manufacturing industries has also accelerated, climbing at over 14% per year (9.5% between 1970 and 1974). Light industries, such as food construction materials, textiles and car assembly, have been particularly prominent. Oil production, on the other hand, which was up to full capacity by the end of 1973, has reached a ceiling, while agricultural output, which fell from 1970 to 1974, has since stood still. The high growth rate of the Nigerian economy over the last ten years has not affected the agricultural sector, whose share in the GDP is estimated to have fallen from 36% in 1970 to 25% in 1974 and (according to ILCA estimates) to 20% in 1978.
Growth has also been accompanied by marked inflation, The annual increase in prices rose to over 22 % between 1974 and 1978 (reaching 25% in the case of food prices). On average it was 50% higher than in the rest of the world, leading to a growing overvaluation of the naira. Various factors have combined to fuel inflation. Wage increases (50% in early 1975) have added to rising labour costs in the public and private sectors. although they have also increased the purchasing power of part of the population. Public expenditure has moved forward considerably, forcing the Government to place a growing reliance on the banking system to finance its cash requirements, despite the spectacular increase in Government revenues. Lastly, the distribution of credit to the private sector has been particularly generous. In short, the increase in the money supply has been unrelated to the actual growth of the economy. It has also occurred at a time when considerable tension has already arisen as a result of too rapid growth.
Nigeria's position with regard to external trade has deteriorated. The balance of trade entered the red in 1978, inducing the Government to launch an austerity programme in early 1978 in order to stem the tide of inflation. Imports were curbed, credits were curtailed and public spending was cut. However, the higher level of oil output since the...