Nigeria, “a center of West African regional trade” (Kesselman, Krieger & Joseph, 2013, 526), has been a member of the Organization of Islamic Conference (OIC) since 1986 and is poised to become one of South Africa’s largest economies if it can decrease “political instability, corruption, inadequate infrastructure, and poor macroeconomic management” (CIA, 2013). The state of Nigeria has abundant natural resources available for private sector exploitation, and trade, such as crude oil, coal, tin, cocoa, peanuts, cotton, palm oil, and timber (CIA, 2013).
Nigeria, possessing an abundance of oil, made some critical historical mistakes during early phases in “the development of the petroleum industry” (Kesselman, Krieger & Joseph, 2013, 538) by abandoning their agricultural sector during the oil boom of the 1970s, with the results that “agricultural export production plummeted from 80 percent of exports in 1960 to just 2 percent by 1980” (Kesselman, Krieger & Joseph, 2013, 538). Since the 1970s “Nigeria has relied on oil for more than 90 percent of its export earnings and about three-quarters of government revenues” (Kesselman, Krieger & Joseph, 2013, 539). On the one hand, “the oil boom generated tremendous income; on the other, it became a source of external dependence and badly skewed the Nigerian economy” (Kesselman, Krieger & Joseph, 2013, 539) and by “1978, the government had outspent its revenues and could no longer finance many of its ambitious projects, causing external debt to skyrocket” (Kesselman, Krieger & Joseph, 2013, 538).
The external debt to GDP ratio forced Nigeria to open up their state borders to privatization starting in 1985 under a first “structural adjustment program (SAP) with the active support of the World Bank and the IMF” (Kesselman, Krieger & Joseph, 2013, 539) which aimed to “reform the economic structures of highly indebted Third World countries as a condition for receiving international loans” (Kesselman, Krieger & Joseph, 2013, 539) by requiring “privatization, trade liberalization, and fiscal restraint” (Kesselman, Krieger & Joseph, 2013, 539). Nigeria struggled during the first phases of global private sector assimilation and “pulled out of its IMF program in April 2002, after failing to meet spending and exchange rate targets, making it ineligible for additional debt forgiveness” (CIA, 2013), but in 2005 was granted “a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments - a total package worth $30 billion of Nigeria's total $37 billion external debt” (CIA, 2013).
Nigeria is a member state of the World Trade Organization and the United Nations, along with the World Bank and IMF, and “is the United States' largest trading partner in sub-Saharan Africa, mainly due to the high level of petroleum imports” (U.S. Department of State, 2013). The United States is also the “largest foreign investor in Nigeria, with U.S. foreign direct investment concentrated largely in the petroleum/mining and wholesale trade sectors” (U.S. Department of State, 2013). The Nigeria-U.S. trade relations are bilateral as “U.S. imports from Nigeria include oil, cocoa, rubber, returns, and food waste” (U.S. Department of State, 2013) and “U.S. exports to Nigeria include wheat, vehicles, machinery, oil, and plastic” (U.S. Department of State, 2013).
While 16.8% of Nigeria’s exports are imported by the United States, the remaining Nigerian export trade percentages are broken down to the following foreign states: “India 11.5%, Netherlands 8.6%, Spain 7.8%, Brazil 7.6%, UK 5.1%, Germany 4.9%, Japan 4.1%, France 4.1%” (CIA, 2012). Indeed, colonialism is not dead, it has simply been privatized. Looking at imports into Nigeria, China is the top importer with 18.3% of all imports into Nigeria followed by the U.S. at 10.1% and India with 5.5% (CIA, 2013).
The largest barriers to increasing foreign investment, expanding trade, reduce debt, increase GDP, and continue full integration into globalization for Nigeria are “political instability, corruption, inadequate infrastructure, and poor macroeconomic management” (CIA, 2013). Like many other so-called developing states, Nigeria’s options are to take the ‘carrot’ with interest rates, risk international isolation, or eventually take the ‘stick’.
Central Intelligence Agency. 2013. CIA Fact Book: Nigeria. Accessed December 28, 2013. https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html
Mark Kesselman, Joel Krieger, and William Joseph. Introduction to Comparative Politics, 6th edition. Boston, MA: Wadsworth, 2013.
U.S. Department of State. 2013. U.S. Relations with Nigeria. Accessed on December 29, 2013. http://www.state.gov/r/pa/ei/bgn/2836.htm