During the regime of General Muhammadu Buhari, who governed Nigeria from 1970 to 1980, the economy of Nigeria experienced rapid economic growth. In fact, growth was so rapid that it received a lot of admiration not only from the African community but from the white community as well. The reason for this immense economic growth was the state of the economy in Nigeria which was largely led by a powerful central government and local autonomous governments which were backed by international agencies such as the World Bank. This enabled Nigeria to attract investors across the world to invest in the huge potential resources the country possessed. This resulted in the rapid development of the economy.
However, there have been several instances where the economic policies adopted by the government in Lagos and Abuja proved disastrous. For instance, in Lagos the policies of successive governments resulted in the concentration of land in a very limited area thereby causing intense land conflict and even communal riots. This situation was further aggravated by the takeover of power by the military government led by General Muhammadu Buhari. The major setback in Nigeria's economic growth came at the time when the global recession hit the economy. It resulted in lower investment and output and inflation also reached unprecedented heights.
Inflation also resulted in an increase in prices of basic commodities and services, which made the consumption cost of ordinary citizens increase drastically. Inflation also forced the government to increase fuel price which again resulted in the reduction of industrial activity. Thus, the major factor hampering the economic growth in Nigeria from 1980 till date is unemployment. The ensuing chaos in the country increased the rate of exploitation of natural resources leading to an increase in the rate of poverty in the country.
The Lagos and Abuja bombings, which resulted in loss of lives are the major reasons which undermined the overall economy of Nigeria. Moreover, the US military presence in Nigeria started to weaken the country's economy further. However, apart from these external factors, Nigeria's socio-economic structure also played a crucial role in determining the overall economic growth in Nigeria. The state governments were able to manage and balance between developmental objectives and social welfare objectives. In this respect, many African states are now also finding themselves unable to meet their developmental ambitions as they are witnessing a shortage of finance.
A decade ago, there was no political stability in Nigeria due to numerous conflicts and bloody battles between the various political groups and the warlordism prevalent in the country. Political infighting often resulted in massive loss of life. Economic infrastructures were also patchy and there were no systematic development programs implemented for providing jobs to the youth. Thus, the overall poor economic growth in Nigeria was mainly due to the aforementioned issues.
But since the mid-eighties, Nigeria has been able to successfully develop its oil industry. Oil exploration is also a key factor that explains the rapid economic growth in Nigeria from the past years up to the present day. In fact, in the last two decades, Nigeria has been able to harness the resource riches located within its boundaries and gain an overwhelming advantage in the international oil trade. It has been able to exploit resources like oil, gas, and natural gas and enjoy an oil supply surplus thereby enjoying unprecedented growth in its economy. Besides, Nigeria is . . . . . . also enjoying an enormous rise in tourism revenue as several new and innovative tourist destinations have emerged in the country.
Besides, in terms of infrastructure development, the Nigerian Government has also taken important steps to enhance the overall efficiency and productivity of the country. There are a number of private sector companies operating in Nigeria, which further boost the overall economic situation of the country. At the same time, it has also become very easy to do business in Nigeria due to various reforms and measures taken by the Government in this regard. There are more investors coming into the country to tap the domestic market as well as the foreign market.
There have been positive changes in the trade scenario between the West and the East since the mid eighties. Most importantly, the introduction of the multi-fuel strategy in Nigeria in the early seventies led to a great increase in petroleum production. At the same time, there were infrastructural developments along the railway line connecting the two major African currencies, the Nigerian Dollar and the English Pound. As a result, there was a significant increase in the import of goods from the developed nations and the reverse trade deficit reduced considerably. At the same time, political stability, good infrastructure and moderate inflation were all important factors responsible for the tremendous economic growth in Nigeria from the previous years up to the present day.