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Pre-Colonial & Colonial History
• Artifacts trace early civilizations as far back as 500 BCE• Igbo, Hausa, Fulani, and Kingdom of Benin• Began trade with European powers 15th-16th century• Became center of slave trade through 19th century• British moves against slave trade began early 1800’s, with Lagos
becoming a colony in 1861• 1885 Berlin Conference solidified Britain’s claim to Nigeria, creating
northern and southern colonies by 1901• Typical British indirect rule, favored Lagos and south over Islamic north
Independence
• Independence in 1960• Initially coalition government, parties ethnically/religiously aligned• Cycle of military coups began 1966, with 2• Civil war 1967-1970 over secession of Biafra (SW region)• Cycle of military coups, occasional civilian rule• Gradually led to regional/religious diversification of parties by late ’90’s• Military & unstable civilian rule suppressed economy and deeply entrenched
patronage/corruption
Demographics
• Population: 160-180 million• 50/50 rural urban split, 24 cities over 100k• 389 ethnic groups; Hausa, Fulani, Igbo, Yoruba • 63% population under 24; median age 18 yrs• 5-15 million strong diaspora, maintains strong
ties to Nigeria• Concentrated in US, UK, South Africa• Significant, well-educated & empowered middle
class, about 20% of population• Emerging consumer economy
Oil
• Oil began in 1958, independence economically hopeful• Joined OPEC in 1971• Government spending in 1970’s, borrowing against oil• “Dutch Disease” in 1970’s-1990’s suppressed
economy• Economy gradually diversified; oil 14% of Nigerian
Economy, but 80% of government revenues• Oil theft thought to siphon off 100,000-500,000 bpd• Sector corrupt, with $ billions unaccounted for• Largest gas reserves in Africa, historically burned off
Political Economy
• ECOWAS founding member (1975), HQ in Abuja• West African Monetary Union, creating common
currency, Eco, among 6 countries• Club de Paris debt restructuring member, 1st country to
complete compact, repay renegotiated debt• Active UN participant since Independence• Founding member of OAU and AU, militarily engaged• Received hundreds of World Bank loans targeting
poverty reduction projects, currently 29 ongoing, $10 billion+
• In good standing with IMF; regional financial anchor state
• AGOA participant, decreasing impact due to decrease in US oil imports
• Has not/Does not meet MCC compact minimums
Democratization
• Prior to 1999, 29 years of military rule vs. 10 years civilian
• 1998 Gen Abubakar embarked on ambitious constitutional democratization; election May ‘99
• 1999 Election of Obasanjo (former military dictator)• Obasanjo’s People’s Democratic Party (PDP) significant
in nationalizing politics• PDP dominated politics through first 4 presidential
elections (in national elections)• National elections marked by steady improvement, but
also political violence (700 killed in 2011 election)• 2015 election most successful yet, still marked by
discrepancies but little violence• Presidents informally switch back and forth
Christian/Muslim• 2015 Election Pres Buhari (former military dictator), first
transition to opposition All Progressive’s Congress (APC), also broad-based national party
• Both party’s platforms very similar, 2015 election assessed to be poll on former administration
• Problems but Progress…
Violence and Insurgencies
• Boko Harem in North, tribal insurgents in Niger river delta
• Southern insurgencies date to early 1990’s, in response to oil extraction
• Previous administration paid off militant leaders, violence decreased
• BH, 2009, active in NE provinces, affiliated with IS
• Responsible for about 20,000 deaths
• Multinational efforts, February push have met progress, but BH still a significant threat
• Buhari’s victory over Jonathan attributed to failures against BH
Economy I
142
2010 World Bank Report:
• 25.89% of those in poverty in Africa (Below $1.25/day) lived in Nigeria
• Nearly two-thirds of Nigerians live below poverty line
~6.5%
Economy III
*2014: Nigeria’s statisticians recalculated its GDP figures to take account of new industries such as mobile telecommunications and discovered that it had become Africa’s biggest economy, ahead of its main economic and geopolitical rival, South Africa.
Nigeria Inflation Rate is 9.2%• Food +10.0%, imported food +10.4%• Housing, water, electricity gas +7.3%• Clothing and footwear +9.3%• Transport prices +9.1%• Education +9.2% • Health +8.7 %
Imports
Nigeria ought to be Africa’s biggest oil and gas producer, yet it suffers crippling fuel shortages
Non-oil Sector Growth
The economy is diversifying and is becoming more services-oriented, in particular through retail and wholesale trade, real estate, information and communication.
Current Breakout of Growth:
• 57% services
• 21% agriculture
• 9% manufacturing
Issues:
• A country that should be the region’s breadbasket cannot even feed itself.
• The whole country produces only as much electricity as a single medium-sized European city.
Institutions I
Two Key Problems:
• Corruption
• Inability to provide basic services
Nestle Factory: it has to generate its own power, clean up its own water and provide health care for its employees, and poor transport links drive up the cost of its raw materials. Even so, it is one of the company’s most efficient factories on the globe, in part because of the benefits of scale from producing a narrow range of products for a huge market
144129
Improved water source, rural (% of rural population with access)
Improved water source, urban (% of urban population with access)
Corruption
• The World Bank estimates corruption’s direct cost to Nigeria to be as high as 12 percent of GDP.
• Control of corruption, which showed significant improvement in 2003 to 2008, deteriorated when President Jonathan took office
• President Buhari, elected in June, ran on a platform of anti-corruption.
Institutions II
Health
Characterized by:
• Lack of coordination
• Fragmentation of services
• Dearth of resources including drug and supplies
• Inadequate and decaying infrastructure
• Inequity in resource distribution
• Access to care and poor quality of care
Only 0.4 Doctors / 1000 people
Presidents Emergency Program for AIDS Relief (PEPFAR)
• Adult HIV prevalence is 3.1%
Successes
• Polio: No new cases since 24 July 2014
• Ebola outbreak containment• Liberian man arrived by airplane into Lagos, Africa's most populous city. Died in
hospital 5 days later, set off a chain of transmission that infected a total of 19 people, of whom 7 died.
142
Education
• Literacy rate: 66.4%• Primary school participation, Net attendance ratio male: 72%• Primary school participation, Net attendance ratio female: 68%• Primary school participation, Survival rate to last primary grade: 79.9% 142
Female Literacy RatePrimary School Enrollment
2012: Agricultural Transformation Agenda
• Nigeria spends over $11 billion annually on imported rice and sugar
• Aimed at reducing Nigeria’s increasing reliance on food imports
• Growth Enhancement Scheme:
• subsidizes the costs of such major inputs as fertilizer and seedlings
• free mobile phones to farmers• provide timely information on input and crop prices• facilitate mobile banking
• 2013: Government claims that nearly a half million jobs were created
• Agriculture could provide help mitigate decline in the oil industry
Security Issues
Insurgency in the north-east and other parts of the country
• Claimed about 20,000 lives and forced some 1.5 million people from their homes
• Humanitarian situation: An increased number of both internally displaced persons and refugees in neighboring Cameroon and Niger
• Negative implications for investment
• May hamper the fight against poverty
• Increase crime
In February under President Buhari, an offensive against Boko Haram drove militants from most big towns and pushed them back into a few forest and mountain hideouts.
Problems III
Corruption
Major rural-urban and regional tensions
• Varying natural-resource endowments
• Unequal access to political power
• Uneven shares of national wealth
• Insufficient federal services
Infrastructure Issues:
• 40% of the federal primary road network is in poor condition
• 18% of 197,000 kilometer road system is paved
• Backbone of the rail network is over 100 years old
• As of 2007 only 25% of trains operational
***Most Nigerian roads, refineries, railways, airports, power plants and water/ sanitation utilities date to the oil boom in the 1970s
2015 Outlook
• Moderate growth of 5%, due to vulnerability to
• slow global economic recovery
• oil-price volatility
• The low oil price will lead to a sharp decline in fiscal revenues
• Overall impact on non-oil sector GDP will be relatively muted
• Oil sector is expected to remain the main driver of growth over the medium term and, in the light of the recent macroeconomic challenges, the government has adopted an adjustment strategy that hinges on tightening government spending and shoring up non-oil revenues to compensate for dwindling oil revenues.
Beyond: Governance
• Public enemy #1: CORRUPTION…but it’s the only thing that works
“This is not a country that is morally convinced about [the evils of] corruption: corruption is the only thing that works.”
– Bishop Matthew Kukah, leading religious figure and moral authority in Nigeria.
• Weak Institutions
• Legislature
• Judiciary
• Rule of Law
• Elections (2015 Success)• Security
• Police
• Military
• Insurgents
PatrimonialismNeopatrimonialism
Clientelism
Beyond: Security
• Boko Haram in the North
• Prison De-radicalization
• Economic Development
• Infrastructure
• Police and Military
• Build Trust with Communities
• Training & Joint Operations
• Infrastructure
• Rebel Payments
• Electricity
• Currently 185/189 infrastructure – 67/217 for output
• 1300 – 4800 MW (Production at given time) -
• 24.87 Billion kWh (Output in 2015)
• 257.9 Billion kWh (South Africa)
• 4099 Billion kWh (United States)
• Transportation
• Rail = ¼ of 1960s level
• Road = 20% paved
• Inefficient Supply Chain & Poor Link to Market
• Ports
• No Deep Water capability
• Burdensome Customs
• Traffic in Lagos
Beyond: Infrastructure
Beyond: Economy
• Global Competitiveness Index
• 127/144 – Pretty Low
• Stage 1 – Factor-Driven Economy
• Areas Needing Most Improvement• Institutions (Basic)
• Corruption, Trust, Bribes/Graft, Waste, Cost of Violence
• Infrastructure (Basic)• Roads, Rail, Ports, Electricity
• Health and Primary Education (Basic)• Malaria, Infant Mortality, Life Expectancy, Primary Enrollment
• Goods Market Efficiency (Efficiency Enhancer)• Trade barriers, Customs Procedures, Import-Heavy
• Until the Basics are Met, Nigeria Cannot Transition to a Stage 2 Economy
Mechanism of the Resource Curse The Fix
Economic Instability Tied to Market Volatility Stability Fund
Government Income Direct Treasury Allotment
Long-Term Economic Growth Future Generations Fund
Poverty Alleviation Priority Sectors Fund (Education, Health, Rural Development, Infrastructure, Environment)
Indigenous Considerations Oil-Producing Region Compensation Fund
Behavior Mechanisms (Rent-Seeking, Corruption) State, Independent Watchdogs (Access & Overlap)
Institutions Capacity Building Projects (Tech Assist and Training to Nigeria’s Oil Workers)
Beyond: Economy
• Resource Curse
• Diversify
• Services (50% Revenue)
• Nollywood
• Agriculture
• Manufacturing
• New Revenue Streams
• New Tax Schemes
• Reduced Corruption (Plugging Leaks)
• Stop Subsidies (Petrol – Fuel/Kerosene)
Beyond: Economy
• Protectionism (Mercantilism) – Makes construction very expensive
• Cement• Dangote Cement (Connected) - 60% Margin• Lafarge (French firm) = Competition• Resulted in reduced construction costs by 40%• Resulted in Increased construction
• Textiles• Until 2010, ban on imports to spur local economy• Resulted in underdeveloped retail Industry
• Automobiles• Heavy import Tariff• Imports down 2/3• Benin (Neighbor) up 3x• Resulted in flourishing black market
• The Market Will Find a Way