14 Jun Being Made Poor: Economic Development in Nigeria
Abiodun Olamosu reviews the classic 1975 book, Economic Development of Nigeria: The Socialist Alternative by Ola Oni and Bade Onimode which will soon be republished. Oni and Onimode wrote about the underdevelopment of Nigeria and how the country and its people were made poor. They also provided a programme for the country’s development which included the disengagement from international capitalism, the introduction of democratic planning, public ownership and control of the means of production, distribution and exchange. Olamosu provides a critical introduction to the book. In 1975 ROAPE published the address made by the authors on the publication of the Economic Development of Nigeria, which can be accessed from our archives here.
By Abiodun Olamosu
Ola Oni and Bade Onimode, Economic Development of Nigeria: The Socialist Alternative (Nigerian Academy of Arts, Sciences, and Technology, 1975).
Economic Development of Nigeria: The Socialist Alternative, originally published in 1975, was perhaps the first political economy treatise with a socialist perspective to emanate from Nigeria. This book is soon to be re-published by Option Books and Information Services in Nigeria. Economic Development of Nigeria was not only a pioneering work on Nigerian political economy, but also served as an economic programme to defend the best interests of working people. At the time the poor were being attacked by both the ruling elite and scholars from the faculties of social sciences in Nigerian universities. The latter came forward to present right-wing solutions for the country after the Civil War of 1967-70.
The authors of Economic Development of Nigeria were two notable socialists and teachers of economics at the University of Ibadan, Nigeria. They had backgrounds in the radical traditions of the London School of Economics and University of London College, Ibadan (now University of Ibadan) where they received their training in economics (the address made by the authors on the publication of the Economic Development of Nigeria can be accessed here).
The new edition is expected to be timely as it is coming at a time that capitalism has created more problems than it can solve in the present era of neoliberalism. At its inception, the Economic Development of Nigeria set out to unravel the underdevelopment of the Nigerian economy by foreign capitalists while suggesting a socialist path of development to solve the economic problems identified in the study.
There have been significant changes since the Economic Development of Nigeria: the Socialist Alternative was written and published in 1975. For instance, the economy of Nigeria has experienced significant growth in the last four decades without impacting positively on the lives of ordinary working people. The economy is also no longer under foreign domination, but under the control of the indigenous capitalists and the ruling elite. In 1973, a couple of years before publication, Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) to maximise its gains in oil exploration and this helped its oil to be sold at a higher price. As a result, over the decade of the 1970s, Nigeria earned huge wealth from oil, to the extent that one of the military heads of state, General Yakubu Gowon, declared that ‘money is not the problem: of Nigeria, but how to spend it.’ With oil, corruption has become prevalent. As Olukoye Ransome-Kuti revealed, between October 1979 and December 1983 during the second republic, over US$200 billion was realised from oil sales as revenue but there was little to show for this. The prevailing state of inequality could account for why Aliko Dangote, a Nigerian and the richest person in Africa is worth about US$15 billion in assets (net), while the minimum wage in Nigeria remains less than US$20 per month.
The economic importance of Nigeria in Africa cannot be overemphasised. It has the largest economy in sub-Saharan Africa and a huge population that dwarfs any other country in the region. In addition, its role as a semi-imperialist state in the region makes it imperative that any analysis of the Nigerian economy also includes a wider analysis of sub-Saharan Africa.
Central to the discussion by Oni and Onimode was the issue of foreign domination of an economy largely influenced by capitalist interests. This, according to them, started from the colonial period, spanning about a century. The authors therefore canvassed for the taking over of the neo-colonial economy from foreign capitalists as a way of addressing the problem.
Oni and Onimode went on to state that the huge wealth realised from oil was spent on frivolities for the elite in the face of the enormous challenges of economic well-being facing the poor masses. The authors also condemned the Nigerian government for not being enterprising enough to capitalise the oil and gas sector in order to be able to generate more wealth. Instead the government allowed the foreign oil majors free rein to dominate the sector, the major source of the country’s foreign exchange earnings and government revenues.
In pursuing the same line of argument, Oni and Onimode identified five ways that the foreign multinational corporations short-changed the Nigerian economy and carried out its exploitation. These included the repatriation of profits and dividends, interest, contractor finance and supplier credit, service charges and rents. In addressing such problems, the authors canvassed for a policy shift towards greater economic relations with Russia, China, etc that they believed were socialist economies.
The authors argued that social inequality was a form of waste which should be eschewed in the interests of the poor. Other forms of economic waste that they identified included unemployment, underemployment, capitalist competitive rivalry as with advertising, corruption, destruction and misallocation of resources by poor economic planning.
Oni and Onimode described the economic planning in place as neo-colonial and argued that the social infrastructures provided by the instrumentality of such planning worked to serve the business interest of the capitalists, imperialists and investors at the expense of the poor. In the opinion of the authors, this form of economic planning was responsible for why successive national plans did not capture the needs of the poor as they had little or no provision for social welfare – employment, education, health, rural communities or housing.
In reaction to the prognosis of Nigeria’s economic planning, Oni and Onimode proffered an alternative socialist economic plan. This they defined as a strategy for the establishment of a non-exploitative society with the full liberation of everyone to enjoy the fruits of their labour. The characteristics of such planning as explained by the two authors included disengagement from international capitalism, the introduction of democratic planning, public ownership and control of the means of production, distribution and exchange and comprehensive physical planning. This planning, they argued, should emphasise the needs of the mass of the people rather than serving an exploitative profit motive. The focus and target of such socialist economic planning, according to Oni and Onimode, should be towards enhancing economic development and the well-being of working people. This should include full employment with living wages, free education at all levels, equalisation of educational opportunities, mass education, acquisition of skills in terms of the introduction and application of science and technology, better working conditions, cultural decolonisation and the provision of social infrastructures – water, electricity, transport, medical and educational facilities.
In showing how varied the resources available to the economy were, Oni and Onimode identified different types of natural resources in which the country had a comparative advantage. These include ferrous and non-ferrous, metals, petroleum, natural gas, arable land, thickly wooded forests, huge rivers, prodigious fisheries, crops and animal husbandry. The authors therefore canvassed for a major national programme that would bring science and technology to the masses who as the direct producers of the wealth of the country could harness and develop the available resources to their full capacity.
Oni and Onimode also touched on the inefficiency associated with the public utility corporations of the 1970s. The problem was said to hinge on poor planning, management and the capitalist economic environment rather than being due to any inherent short-comings of public enterprises.
The argument of Ola Oni and Bade Onimode on the underdeveloped state of industrialisation was that this could be traced to the deliberate colonial policy that strongly discouraged industrial development. In contrast, only the first stage of processing primary products and the last stage of assembling manufactured goods was introduced. This was why, according to the authors, the issue of acquiring technology in advancing the cause of industrialisation in the country had not been addressed.
The authors identified various ways that agriculture had been neglected. This explained the plight of the poor farmers. Typical of this problem was the colonial orientation in agricultural policy that placed a premium on growing cash crops rather than food crops for the local market. This policy continued even after the end of colonial rule and had its attendant consequences as highlighted in the Economic Development of Nigeria.
Oni and Onimode also showed how the involvement of multinational corporations led to the domination of commercial activities. These institutions, according to the authors, controlled the entire commercial system of import and export of goods and services together with other sectors including insurance, banking and shipping services and other forms of transportation.
In taking a concrete step against such foreign domination, the programme of action canvassed by Oni and Onimode was for the state to take over all wholesale trade. They also canvassed for the replacement of the role of the foreign multi-national companies by indigenous small business owners organised in cooperatives. These would then control and manage the import-export business.
Oni and Onimode drew a parallel between socio-economic regulation and socio-economic reform meant to ameliorate the system to avoid crisis and achieve economic stability and by extension political stability. Key to such reforms and regulations according to the authors was the Keynesian economic recipe that involved state intervention to drive the economy. Other types of regulations identified include fiscal and monetary policies, price control, income regulation and control of foreign trade. Comprehensive state planning was seen as a way of addressing problems associated with socio-economic regulation that regularly surfaced. The book then goes on to discuss in detail the foreign control of the economy and indigenisation.
The starting point of the authors’ analysis of foreign domination of the Nigerian economy has been overtaken by events. Most of the economy is now in the hands of Nigerians. This is in contrast with the position in the 1970s when over 80 per cent of the formal economy was owned and controlled by foreign companies. This process started as early as the 1970s with the government policy of indigenisation. Yet the result was an indigenisation of capitalism rather than its replacement. This did not resolve the fundamental contradictions and crises of capitalist Nigeria.
Despite the high level of indigenisation, the dominant oil and gas sector is still responsible for most of the country’s foreign exchange earnings and government revenues, yet it predominantly remains in the hands of foreigners. This is due to the technical skills and huge capital outlays that are required. But also, the fact that the local ruling elite still handsomely benefit from the sector.
Since the book was first published, successive governments have paid lip service to the issue of diversifying the economy. Though the ideas of the ruling elite on the question of diversification are also problematic as this is restricted to going back to the old ways of practising and exploiting agriculture. There is no programme for the diversification of the oil and gas sector. No more than 30 percent of production is refined with the remainder sold as crude oil, a form of raw material.
The authors promotion of economic planning is flawed. Economic planning may be desirable to address the basic needs and interests of working people, but its actualisation in a class divided society like Nigeria will largely depend on the balance of forces between the different classes. This is why more often than not the best economic plans turn out to be a mirage for working people. It is also not enough to have what the authors referred to as alternative socialist economic planning that is undertaken by experts from above. Their approach to the alternative socialist programme outlined throughout the Economic Development of Nigeria exposes their sympathy towards the former USSR, China and other so-called communist states. This shows a contradiction inherent in their analysis. In one breath, they canvassed for democratic control and management of the economy, including economic planning, but on the other they show-cased the USSR and China as examples of what they hoped to achieve.
However, the best way to achieve welfare programmes or better living standards for working people is for them to pursue the cause of socialism from below. This aims to win power into their own hands through their own collective actions. This strategy sees that reforms are only granted under the threat of revolt.
In addition, the role of state intervention in the economy must be understood in a historical perspective. So, state capitalist intervention was introduced during the Second World War under colonial rule, and saw the state playing a key role in the commanding heights of the economy. This was to strengthen the economy by providing employment while expanding public infrastructures like road, rail and ports. Such intervention could hardly last. As soon as the situation normalised after the war capitalists were tempted to continue in their old way of economic competitive rivalry and reduced state intervention. In such circumstances, economic planning, as envisaged by Oni and Onimode, was hardly practical.
Oni and Onimode claim that it was a deliberate colonial policy to discourage industrial development. Looking to multi-national corporations or foreign donors for foreign direct investment (FDI) has caused more harm than good – industrial development has remains elusive. The effect of this is that since the 1970s more money has left Africa (as looted funds transferred to western bank accounts and the repatriation of profits) than has come into the continent as donor aid or FDI.
The authors are correct to see the neglect experienced in the area of agriculture that was previously the mainstay of the economy before oil. Agriculture should be systematically linked with industry in order to achieve maximum benefits for both sides. Investment in agriculture could also alleviate the key problem of unemployment and underemployment. In fact, agriculture has suffered in the same manner as local manufacturing by the introduction of free trade, allowing cheap exports to stifle local development.
As we have seen the indigenisation of commercial activities has not improved the situation. This is a clear indication that the problem was not that of the dichotomy between foreign and indigenous capitalists, but fundamentally the problem of capitalism. A programme that canvasses for the nationalisation of the economy under workers’ control, planning and management would be a more practical solution.
On the issue of socio-economic regulation and reforms, it is only by understanding the ideological dimension of such reforms and their class nature that they can be properly understood. As Oni and Onimode explained in Economic Development of Nigeria, the regulation of workers’ wages unilaterally by the government through commissions was forced down the throat of workers and their organisations. In contrast, the government failed to regulate the prices of goods services, rents etc. The reason for this disparity in implementation is class conditioned.
Reform and regulation are not designed to favour the poor. They are meant to persuade the victims of the system to retain faith in the organisation of society while the real beneficiaries of the reforms and regulations are the elite. This is why socialists today should have no illusion that reform and regulation can permanently change society to the benefit of the poor majority.
More often than not reform is a product of pressure from below, especially when the overall situation is not favourable for the ruling class. Under more favourable situations, the capitalist class dictate the pace of reform in their own interests. This is what we have experienced over the last three decades or so, under the regime of neoliberalism. Governments have gradually reduced the tax burden for the rich (by reducing the rate of corporation tax and providing other ‘incentives’) while the same governments have reduced expenditure on health and education and often introduced fees, either directly or indirectly.
A recent report from Oxfam confirms these trends for the Nigerian economy. Annual economic growth averaged over seven percent in the 2000s, and yet Nigeria is one of the few African countries where both the number and the share of people living below the national poverty line over that period increased.
Government policies implemented under neoliberalism include privatisation, commercialisation and liberalisation of the economy. In the 1980s the Nigerian government was advised by the IMF/World Bank to cut spending on education, health and public transportation. This brought an end to government intervention in business and public utility corporations as was the case during the ‘Keynesian period’ in the 1940s-1970s. The huge inequality brought about between the poor and the rich as a result of these policies necessitated a corresponding reform in the form of a debt package which was meant to be extended to individuals and the state. The repercussion of the crisis resulting from such debt accumulation has been enormous.
The main thesis of Ola Oni and Bade Onimode’s book was that the Nigerian economy was at the mercy of colonial capitalism in terms of control and domination by foreign capitalists and other interests and such a pattern continued in post-colonial Nigeria. This was the case in the varied sectors of commerce, trading, agriculture, industrialisation and oil and gas. The Nigerian working people were at the receiving end of such socio-economic relationships as their living and working conditions deteriorated and unemployment increased. Any attempts at regulation and reform were geared towards sustaining the system of capitalism. Economic Development of Nigeria also argued that by virtue of the country’s abundant human and natural resources Nigeria could not be said to be poor, yet the economic system has resulted in most them having been made poor. For this reason, the authors argued for the total transformation of the economic system.
The new edition of Economic Development of Nigeria will surely serve a useful purpose for new readers despite changes that have taken place in the nature of Nigerian capitalism since it was written. The book still provides a vital account of the economic history of Nigeria up to the mid-1970s. This book is highly recommended to students of economics, labour economics, political economy, economic history, activists and those interested to know how the Nigerian economy developed and the possibility of a radical alternative future.
Abiodun Olamosu is a Senior Researcher at the Centre for Social Policy and Labour Research (SOPLAR), in Lagos, Nigeria. As a long-standing socialist and activist he was interviewed on roape.net.
Featured Photograph: Market in Lagos, Nigeria (3 May, 2005)