A Development Plan to Integrate Nigeria into the Global Economy

Nigeria is the most populous country in Africa with a population of over 130 million.[1] It encompasses people from over 250 ethnic groups and covers over 900,000 square miles.[2] Until 1999, the country experiences thirty-nine years of dictatorship after the end of colonization. Today, the word "Nigeria" is almost synonymous with corruption. Nigeria has also been known for its poverty. However, the new democratically elected government of Nigeria is now trying to break that stereotype by implementing an ambitious set of reforms to end corruption and integrate into the global economy.

Corruption

Since the 1999 elections, Nigeria has experienced its longest period of democratic leadership. Though there have been significant efforts to eradicate corruption since the election of Olusegun Obasanjo in 1999, Nigeria continues to struggle to end bribery, money-laundering, and other fraudulent acts. Still, these self-imposed reforms are only the first step in integrating Nigeria into the global economy.

Currently, Nigeria stands at a rank of 150 out of 158 on Transparency International's (TI) Corruption Perception Index that ranks countries based on the amount of corruption within their government;[3] up two places since 2005.[4] On a scale of zero to ten with zero being absolute corruption and ten being absolute transparency, Nigeria scored a 2.2,[5] up from its rating of 1.9 in 2005.[6] The International Monetary Fund (IMF) been working with the Nigerian government though its Policy Support Instrument (PSI) to facilitate both economic and political reform. The first report on the PSI in Nigeria, released in May of 2006, stated that, "The Nigerian authorities are making good progress in their efforts to improve governance and reduce corruption, but huge challenges remain."[7] The World Bank has also partnered with the Nigerian government through their Country Partnership Strategy (CPS) which will, among other things, provide assistance, both financial and technical, to increase transparency and decrease corruption.

The first step in addressing economic reform was to construct the National Economic Empowerment Development Strategy (NEEDS). NEEDS addresses many policies that must be implemented to pursue economic growth; however, corruption is the first step toward economic success. "The bedrock of NEEDS is its vision of a Nigeria with a new set of values and principles, which will facilitate the achievements of national goals of wealth creation, employment generation and poverty reduction," explains the government's official website.[8]

To address the many facets of corruption, several organizations have been created to deal with the enormous task under NEEDS. In 2002, the Economic and Financial Crimes Commission (EFCC) was created to enforce laws formed to punish financial crimes such as illegal banking practices, money laundering, and advance-fee fraud. The Independent Corrupt Practices and Other Related Offences Commission (ICPC) was also created with a similar mission. Within the EFCC, the Nigerian Financial Intelligence Unit was established in 2004 to scrutinize financial operations and possible money-laundering. The Budget Monitoring and Price Intelligence Unit (BMPIU) acts to end bribery in the assignment of government contracts.

In addition, the Extractive Industries Transparency Initiative (EITI) addresses transparency in oil revenues and provides a legal foundation for gathering and publishing this information. The EITI can put an end to the inconsistencies in the reporting of oil and gas revenues that are a major source of corruption within the Nigerian government. For Nigeria, this bill is a significant stride in equally distributing Nigeria's vast oil and gas wealth, an ongoing source of conflict in the Delta region of the country. The initiative's monitoring of the oil and gas industry from 2000-2004 was the first such project in the country's history.

However, winning popular support for these initiatives has proved more difficult than anticipated. Due to Nigeria's long history of corruption, the practice has become institutionalized and accepted among the populous. Moreover, among the anti-corruption reforms has been the privatization of many public enterprises. This restructuring has left many Nigerians out of work without a government safety net set up. For example, while privatizing ports, 10,000 Nigerians were laid off.[9] This has left many Nigerians angered at the government and uncooperative with its new anti-corruption initiatives. More importantly, these policy reforms lack support from the police and politicians. This makes it difficult to prosecute high-level officials for corruption.

Despite considerable effort on the part of the Nigerian government and many international organizations such as the IMF, corruption still continues in Nigerian. Today, it simply happens in a more discrete fashion.^[10] In its report on Nigeria's anti-corruption initiatives, TI explains why policy reforms have not met their expectations. "Despite the resources and time put into the anti-corruption campaign, a major reason for the stubborn persistence of corruption is the perceived conflict of interests on the part of those driving the reform movement. While the president appears sincere in this campaign, the same cannot be said of members of his team."[11]

Economic Policy

The second step to integrating Nigeria into the global economy is economic policy reform. Along with ending corruption, the Nigerian government has put economic policy reform at the forefront of its plan for change. Still, ending corruption within the Nigerian government is primary because none of the following reforms can be effective if they are not built on a stable, responsible government.

The transformation plan for Nigeria is encapsulated in NEEDS. NEEDS addresses five areas in need of reform including the public sector, privatization and liberalization, governance, transparency and anti-corruption, and service delivery. Other issues covered under these five areas are security and rule of law, infrastructure, finance, sectoral strategies, trade, and regional integration. The program addresses the main goals of the Nigerian government and provides a sensible timetable for reform. "Though, NEEDS is a medium-term economic reform programme, its formulation has been made consistent with both short-term realities and long-term imperatives, that derive from the country's long-term goals of poverty reduction, wealth creation, employment generation and value reorientation," according to the government's official website.[12]

NEEDS immediate goals emphasize its commitment to becoming part of the global economy. First, the program aims to minimize the role of the government in business, recognizing that this is the conventional wisdom that has brought so many other economies into the global economy. Second, NEEDS seeks to adopt policies that provide a more conducive environment for the private sector. Third, the program intends to integrate Federal and State reforms. Finally, NEEDS's policy reforms are phased so as to avoid making too many reforms, too quickly.

The World Bank has participated in the reform by making two goals of the CPS investment in infrastructure and making the environment for private sector investment more inviting. The IMF also helps the initiative by using the PSI to publicly support NEEDS through reviews and reports. So far, the IMF praises NEEDS. "The authorities' successful implementation of their homegrown economic reform agenda in 2004 and 2005 has created new opportunities for growth and poverty reduction."[13]

In the IMF's 2006 review of their PSI program in Nigeria, they commend Nigeria's accomplishments and find very few areas where the government has lacked. According to this report, there has been considerable economic growth with a GDP growth of 7% in 2005.[14] Nigeria also saw an increase in its international reserve by $17 billion in 2005.[15] There was also a 3% appreciation of the naira to the U.S. dollar and a 16% drop in consumer price inflation in 2005.[16]

However, the IMF still identifies several areas which need further attention. For instance, in 2005, the real exchange rate appreciated by 19%.[17] The IMF warns that this could hurt Nigeria's competitiveness in the international arena. In addition, the government is having problems selling some of its state owned enterprises; the Nigerian State Telecommunications Company (NITEL) in particular. Additionally, though some reform has been made, the IMF urges Nigeria to further liberalize its agricultural tariffs. Currently, agriculture is sheltered by a tariff that is 50% above tariffs in any other sector.[18] There was also no discernable rise in private investment in non-oil industries in 2005.

This is perhaps Nigeria's biggest problem: they are a heavily oil-dependent state. Thought there was an 8% growth in non-oil GDP in 2005, Nigeria still depends heavily on oil.[19] Nigeria has 36 billion barrels of oil in their proven reserves; however they are also extracting 2.451 million barrels per day.[20] It is thought that the strong 7% growth in GDP in 2005 was due mainly to large oil exports and rising oil prices.[21] In addition, 95% of Nigeria's exports are of oil with the other 5% being mainly from cocoa and rubber. This brings up another potential problem: agriculture comprises the economy's second largest sector, employing 70% of the labor force, but only 26.9% of the GDP.[22]

As has been seen in so many countries attempting to become self-sustaining, reliance upon natural resources and agriculture must be avoided. Natural resources such as oil will eventually run out and the fluctuating prices of oil and low prices of agricultural products cannot produce reliable revenue. Moreover, oil presents its own unique challenges.

Social Problems

Another integral step in development is addressing the social problems that face Nigeria. Though this is not essential to their participation in the global economy, it is important to deal with because it directly effects the government trying to implement the anti-corruption and economic reform policies. If the populous does not see returns on the sometimes rough adjustments that are being made, they may not re-elect Obasanjo, further delaying the delivery of services.

For this reason NEEDS also includes a Human Development Agenda which includes health, education, rural development, housing, employment, and youth services. In addition, the World Bank has supported government programs that promote human development through the CAS, with an emphasis on those that fight the HIV/AIDS epidemic that affects 3.6 million Nigerians.[23] Still, these initiatives seem to be mere recognitions of problems facing the Nigerian people rather than concrete plans of action.

Action on social issues is needed immediately. Health is one, if not the most, important issue facing Nigerians. In Nigeria, there is extremely high risk of dying from preventable diseases such as bacterial and hepatitis A, typhoid fever, malaria, and meningococcal meningitis. In addition, 8% of Nigerians between the ages of fifteen and forty-nine have HIV/AIDS.[24] These diseases reduce the life expectancy in the country to just over 43 years old.[25] Moreover, disease has resulted in a high infant mortality rate of 97.14 deaths per 1,000 live births.[26] Deaths from HIV/AIDS and treatable diseases may also explain the large youth bulge and in the country. 42.3% of the Nigeria's citizens are children under fifteen years old, bringing the country's median age to 18.7 years.

Currently, the government spends only $43 per person on healthcare per year.[27] In total, the government dedicates only 1.2% of the GDP to health.[28] Nigeria also suffers from a lack of skilled health professionals. In the country there are only 27 health personnel per every one thousand people.[29] Clearly, this also reflects a problem with education in Nigeria as well.

Education is also an integral part of NEEDS. However, only 67% of children enroll in primary school with only 29% of children making it to secondary school.[30] This leads to a population where only 66.8% of those over fifteen can read.

Furthermore, only 75.7% of men and 60.6% of women are literate.[31] Additionally, only 57% of women enroll in schools as opposed to 71% of men.[32] Women also make an average of $641 per year while men earn over twice as much with an average income of $1,495 per year.[33] The lower literary rate of women in Nigeria points to inequality between men and women in the country. Therefore, another issue that the government must address that is not addressed in NEEDS, is increasing the equality of women. Increasing women's equality can also lead to unintended benefits like population control and lower infant mortality rates due to the mother's ability to read literature on family planning and children's health.

Population should also be a major concern of NEEDS. The fertility rate for Nigeria is 5.49 children per woman.[34] In addition, only 13% of women use contraceptives.[35] With a population of over one-hundred and thirty thousand people and a population growth rate of 2.38%, Nigeria is growing beyond capacity.[36] If they continue follow this path, it is estimated that Nigeria will reach a population of one-hundred and sixty million by 2015.[37]

Additionally, with over 250 ethnic groups and countless native languages besides the official English language, Nigeria is ethnically fragmented. In addition, the country is nearly divided down the middle with 50% of citizens practicing Islam and 40% practicing Christianity.[38] Another issue of human development not mentioned in NEEDS is creating understanding between ethnic groups that could lead to a calming of tensions in ongoing ethnic conflicts in the country.

Policy Recommendations

Much work is needed to put Nigeria on the road toward development. The country has been torn apart by corruption, conflict, HIV/AIDS, and countless other political, economic, and social issues. Many organizations and scholars have made recommendations for development in Nigeria. The culmination of these suggestions was NEEDS. However, there are still some issues to tackle.

There is hope that Obasanjo's war on corruption can succeed with a few policy adjustments. TI recommends several courses of action. First, it is imperative that the government launch a campaign that will make Nigerians care about their cause and recognize the crippling effects corruption has on the country[39]. Without the support of its citizens, Nigeria cannot win the war on corruption. Next, high-up government officials must "lead by example".[40] To expand on this, TI recommends prosecuting and punishing those who commit acts of corruption, irregardless of their stature in the government.[41] Finally, a constitutionally ban on censorship of public inquires by any office in the government should be established in conjunction with the Freedom of Information Act.[42]

In addition to TI's recommendations, the international community should encourage Nigeria's fight against corruption by providing financial assistance to the agencies that have been established to fight corruption. For instance, the ICPC has told the government many times that it is under funded and requires additional money to carry out its mission in full. The equal distribution of the profits from oil exports must also be implemented. This would signal the end of government corruption and return profits to the real owners of Nigeria's oil: its citizens. Additionally, the IMF should provide funding to ease the transition for Nigerians who have been laid off during privatization. If many Nigerians are left without jobs, public dissent is bound to rise, making a campaign by the government for public acceptance of anti-corruption policies near impossible.

If Nigeria is to become self-sustaining, the government must invest far more time in attracting FDI to develop industry. Though this is included in NEEDS, the plan never specifically addresses the problems of oil and agricultural dependency. This is an issue that deserves much more attention from NEEDS. Oil dependency not only leaves the country vulnerable to fluctuations in the price of oil, but it has the tendency to further intensify existing corruption. In addition, the value of agricultural products is low and subsidies in countries like the U.S. only drive down the price of Nigerian grown agricultural products. Nigeria must accelerate its efforts to diversify the economy and expand the industrial sector to increase the amount of value-added exports.

However, to attract FDI, the government must first invest in its poor infrastructure. Currently, Nigeria does not barrow from the IMF. The IMF only works with Nigeria per the request of the government. The Nigerian government should ask the IMF for a loan to improve their infrastructure. Seeing as under the PSI Nigeria is making considerable progress, the IMF should not object to this request. In addition, Nigeria should continue to work with the IMF and World Bank to develop strategies for sustainable growth and better macroeconomic management.

Social issues must also be part of Nigeria's plan for development. Though education and health are included in NEEDS, they need to be actively improved. Since the creation of NEEDS, there has been little in the way of progress in both of these areas.

One way the government can immediately affect the health and well-being of its people is to implement a program that takes into account is the population's access to clean water and food. Only 38% of people have access to adequate sanitation and only 60% have access to clean water.[43] These issues have particularly dangerous consequences for children. 29% of children under five years old in Nigeria are underweight due to malnourishment. With the help of NGOs and an IMF loan to improve infrastructure, clean water and food can be delivered to Nigerians

The government also needs to include population control, gender equality, and ethnic acceptance important issues in their development program. These subjects can be worked on through another strategy similar to NEEDS that addresses only the social issues the country is facing. With combined funds from government revenue from oil and IMF and/or World Bank loans Nigeria can tackle these obstacles in cooperation with NGOs.

New institutions and programs would be created under this new legislation. First, the government should establish a grassroots family planning education program in conjunction with a supporting NGO. This program would provide Nigerians with literature on family planning and contraceptives. Such a program would also serve as an instrument to empower women by educating them about their reproductive rights and provide support for women who are being physically abused.

The government should also launch an advertising campaign that stresses the importance of educating girls and provide tax incentives for families who do send their female children to school. With a greater number of children in school, the government can set a curriculum that teaches children tolerance of Nigeria's many ethnic groups. Through both interaction with children of other ethnic groups and education on varying traditions and customs, the youngest generation will learn to work together for the future of Nigeria.

Nigeria's current government is to be commended for its efforts to put this country on the path toward development. NEEDS is a fairly comprehensive piece of legislation that addresses the country's three major downfalls: corruption, poor economic policy, and social problems. However, more progress can be made. It is up to both Nigeria's government and the international community to continue the good work that has begun and improve the lives of the Nigerian people.

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