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’.
Resources
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
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