Last week I had the opportunity to participate in a discussion about Nigeria’s post-colonial impoverishment, and its evolution since it became independent in 1960. I learned many things about the country, and I though it might be interesting to share some of these insights with you. The discussion was led by Professor Catherine Duggan from Harvard Business School. She’s a political scientist, and has researched Nigeria among other emerging countries.Did you know that at the time of independence Nigeria’s real GDP per capita was substantially higher than that of China and India? I didn’t. And Nigeria kept doing better until the 80’s, at which time oil became the dominant industry. By 2008, China had multiplied its 1960 per capita GDP by about 11; India by 2.5; Nigeria, by less than 1.5.
70 to 80% of the Nigerian budget is covered by oil revenues. This is “easy” money for the government to get – leaving aside the USD $ 1 billion/month that seems to be “getting distracted.” Because of this, the politicians lack incentives to create the right conditions for the private companies to be able to operate normally: they don’t need to collect corporate taxes to cover public expenditure. Instead of helping create growth in non-oil industries, they concentrate on distributing oil income in a way that consolidates their power.
As a consequence, other industries have not developed as they could (and I believe should) have. For instance, while Nigeria was exporting agricultural products, now it needs to import them so as to supply enough food to its population. And still, about 60% of its arable land is not cultivated. By the same token, investment in power generation lags behind, affecting both production costs and the lives of most Nigerians. (You may have read about this in my previous post on the excitement of blackouts.)
Add regional and ethnic tensions fueled by economic differences between North and South and political corruption to the mix and you have the ingredients for holding back the country. While a few got richer and richer, most became poorer and poorer.
But Nigerians refuse to accept the situation. Instead, they want to contribute to changing it. There will be presidential elections on February 2015. I didn’t learn about this yet, so I can’t comment.