




































In ternationa l
Scholars
Journa ls

 

African Journal of Agricultural Marketing ISSN 2375-1061 Vol. 6 (10), pp. 001-011, October, 2018. Available online at 
www.internationalscholarsjournals.org © International Scholars Journals 

 

Author(s)                                           Author(s) retain the copyright of this article. 
 
 

 

Full Length Research Paper 

 

Economic crossroads: The experiences of Nigeria 
and lessons from Malaysia 

 
Okezie, C. A.1* and Amir, Baharuddin H2

 
 

1
Department of Agricultural Economics, Michael Okpara University of Agriculture, Umudike, Nigeria. 

2
School of Social Sciences, University Sains Malaysia, Pinang, Malaysia. 

 
Accepted 20 May, 2018 

 
Nigeria has the potential to become Sub-Saharan Africa’s largest economy and a major player in the global 
economy by virtue of its human and natural resource endowment. These potentials have remained untapped, 
and if current trends continue, Nigeria runs the risk of not meeting the internationally agreed millennium 
development goals (MDGs) by 2015. This paper is an attempt to assess the economic performance in Nigeria 
with a view of identifying what went wrong and drawing lessons from Malaysia for its vision 2020. The two 
countries have the vision of becoming advanced economies by the year 2020. Nigeria’s economic landscape 
especially since the oil boom of the mid 1970’s has become the textbook example of Africa’s economic 
growth and tragedy with a gross domestic product (GDP) of about $43 billion in 2001, the economy has 
shrunk to a third of its size in 1981, per capita income has shrunk from $1150 in 1991 to a barely $300 in 2001. 
As at 2001, Nigeria had received appropriately $300 billion from oil exports since the mid 1970’s but per 
capita income was 20% less than the 1975 level. The economic structures remain highly undiversified, with 
oil accounting for than more 95% of exports and manufacturing sector accounting for less than one per cent 
of exports. In 1999 the country returned to the path of civil democratic governance, economic growth has 
risen substantially, with an annual average of 7.4% in the last decade. But the growth has not been inclusive, 
broad-based and transformational. The implication of the trend is that economic growth in Nigeria has not 
resulted in the desired structural changes that would make manufacturing the engine of growth, create 
employment, promote technological development and induce poverty alleviation. The one lesson for Nigeria 
is that for it to attend its Vision 2020 it must promote an all inclusive growth in all sectors. 

 

Key words: Economic growth, gross domestic product (GDP), vision 2020, Nigeria, Malaysia. 
 
 
INTRODUCTION 

 
Nigeria, with a population of about 120 million, is Africa‟s 
most populous country and the continent‟s third largest 
economy. Oil dominates the economy, accounting for 
about 80% of federal government revenues, and 95% of 
foreign exchange earnings with a continuously declining  
 
 

 
*Correponding author. E-mail: ccaokezie@yahoo.com. 

 
Abbreviations: GDP, Gross domestic product; IMF, 
International Monetary Fund; SAP, structural adjustment 
programme; NEEDS, national economic empowerment and 
development strategy; FDI, foreign direct investment; FTZs, free 
trade zones. 

 
 
 
 

 
countries. Since its independence in 1960, the country 
has undergone major political and economic changes. It 
has attempted to forge a unified nation out of diverse per 
capita income and comparatively unfavourable social 
indicators. Nigeria is one of the poorest oil producing 
regional, ethnic and religious groups through a federal 
structure of government, whose leadership has changed 
no less than eleven times, mostly through military coups 
(AIAE, 2003).  

During the 1970s, Nigeria evolved from a poor 
agricultural economy into a relatively rich, oil-dominated 
one. In 1969 the oil sector accounted for less than 3% of 
gross domestic product (GDP) and a modest US$370 
million in exports (42% of total exports); per capita 
income was only US$130. More than half of her GDP 

file:///C:\Users\user\Documents\REPUBLICATION\AGRICULTURAL%20SCIENCES\AppData\Local\Temp\www.internationalscholarsjournals.org


 
 
 

 

was generated in the agricultural sector. By 1980, the oil 
sector accounted for nearly 30% of GDP, oil exports 
totaled US$25 billion (96% of total exports), and per 
capita income exceeded US$1,100. Following the 
discovery and exploration of oil, the economy 
experienced many symptoms of the “Dutch disease”, with 
the real effective exchange rate appreciating steadily 
during the 1970s (Ahmad and Singh, 2002). The steady 
erosion of competitiveness of the non-oil tradable goods 
sector was reflected in the substantial decline of 
agricultural exports, which began in the mid-1960s, and 
continued through 1976, when oil production reached its 
peak. Notwithstanding the dramatic rise in oil revenue in 
the 1970s, the government failed to strengthen public 
finances. The excessive expansion of public expenditure, 
from an average of 13% of GDP during 1970-1973 to 
25% in 1974-1980, moved the fiscal balance from a small 
surplus to a deficit, averaging 2½% of GDP a year. The 
monetary financing of these deficits contributed to a rapid 
growth in broad money and a sharp acceleration in 
inflation. The real effective appreciation of the currency 
(Naira) that followed the surge in oil prices toward the end 
of 1973 eroded Nigeria‟s competitiveness, and growth of 
real GDP slowed markedly. A buoyant oil sector 
sustained an average external current account surplus of 
1½% of GDP during this period, while gross international 
reserves averaged the equivalent of about seven months 
of imports. By 1980, the country‟s external debt was only 
US$4.1 billion, or 5% of GDP, and the debt-service ratio 
was a modest 3.7% (CBN, 2010; Addison, 2002; Okonjo 
et al., 2003). 
 

The economic policy orientation during the 1970s left 
the country ill prepared for the eventual collapse of oil 
prices in the first half of the 1980s. Public investment was 
concentrated in costly, and often inappropriate, 
infrastructure projects with questionable rates of return 
and sizable recurrent cost implications, while the 
agricultural sector was largely neglected (Ajakaiye, 1996; 
EDF, 2001). Nigeria‟s industrial policy was inward-
looking, with a heavy emphasis on protection and 
government controls, which fueled an uncompetitive 
manufacturing sector. Nonetheless, Nigeria‟s economy 
has remained dominant in Africa. To reverse the 
worsening economic fortunes in terms of declining 
growth, increasing unemployment, galloping inflation, 
high incidence of poverty, worsening balance of payment 
conditions, debilitating debt burden and increasing 
unsustainable fiscal deficits, among others, government  
embarked on austerity measures in 1982 
(Ajakaiye,1990). Arising from the minimal impacts of 
these measures, an extensive structural adjustment 
programme was put in place in 1986 with emphasis on 
expenditure reducing and expenditure switching policies 
as well as using the private sector as the engine of 
growth of the economy via commercialization and 
privatization of government-owned enterprises. Though 
some benefits were achieved at the initial stage, such 

  
  

 
 

 

benefits could not trickle down to the poor (NAPEP, 
2001). Rather, the incidence of poverty keeps on 
increasing. As such, resistance came up from many 
stakeholders, particularly the civil society, the labour 
unions and the organized private sector. Even the 
economic reform programmes of the present democratic 
government were not spared from this resistance. In fact, 
it is increasingly difficult to implement any credible  
economic reform programmes given people‟s 
experiences with the previous ones. The inability to 
achieve the goals of these reform programmes have 
been linked to several factors. Apart from the top down 
approach to initiating and implementing these 
programmes, political and ethnic instability has been 
adduced as important factors.  

Nigeria, for instance, has been ruled by the military for 
25 of its 50 years as an independent nation. The origin of 
political instability in Nigeria has been the inability to forge 
a national entity that transcends ethnic, regional, religious 
and economic interests. These diverging interests led to 
scores of political coups and counter coups. The principal 
ethnic groups in Nigeria are the Hausa in the north, the 
Yoruba in the west, and the Ibo in the east, and the 
principal religious groups are the Muslims in the north 
and the Christians in the south. The federal structure of 
Nigeria has changed dramatically during the past 
decades; the country‟s original three regions have since 
been divided into 36 states and the Federal Capital 
Territory of Abuja. In addition, there are 774 local 
governments. Even at the public sector level, the 
involvement of lower tiers of government has been low 
while those of the civil society and the organized private 
sector have equally been tardy. 
 
 

Problem statement 
 
The key questions to frame the discussions include: 
 
1. Where is Nigeria relative to where it needs to be? 
2. Why is it where it is?  
3. What has been done in the past or being done 
currently to change the situation?  
4. What are the lingering challenges, and a possible 
agenda for change? In other words, can the Nigerian 
economy move from the historical sluggish growth trends 
to a vibrant growth path that can transform the structure 
of the economy and enable her in the attainment of the 
vision enunciated under vision 2020 and launch her into 
the league of advanced economics. 
 
 

Objectives of the paper 

 
Arising from the aforementioned questions, the paper 
seeks to: 
 
1. Examine the performance of the Nigerian economy; 



 
 
 

 

2. Take stocks of what works and what did not; 
3. Draw lessons from the Malaysian experiences; and 
4. Find solutions to the existing sources of problems. 
 

 
METHODOLOGY 

 
The approach used in the report is descriptive but mostly analytical. 
Fundamentally, the approach provides an in-depth assessment of 
the macro and micro aspects of the economy, complemented with 
an evaluation of the human development record. The emphasis on 
the human development balance sheet derives from the fact that 
the economy is ultimately about people and resources. Thus, no 
proper understanding of the economy and its future prospects can 
be made without a better understanding of the human development 
indicators, human capital resources, poverty and inequality, gender 
issues, employment and factors likely to hamper productivity such 
as the HIV/AIDS pandemic and exclusion/suppression of productive 
groups such as women.  

As much as possible, the analysis of the most recent 
developments (last five years) is done in comparative perspectives 
in comparison with the country‟s own historical trends but in some 
cases also with other African and developing country performances. 
The goal is to dramatize the distinguishing features of the economy 
and its management, as well as its key economic development 
challenges. The assessment is data intensive, and the data are 
from secondary sources. The macroeconomic data come from the 
publications of the Central Bank of Nigeria, Federal Office of 
Statistics, relevant ministries and government agencies, the World 
Bank‟s Global Development Indicators, the International Monetary 
Fund‟s (IMF) World Economic Outlook databank, International 
Financial Statistics; and from sundry publications as indicated in the 
references. 
 

 

Nigerian economy in perspective 

 

Policy regimes 

 

The Nigerian economy has undergone series of changes 
over time with different policy regimes. Prior to 1986, a 
medium-term “development plan” was adopted as a 
major framework for developing and restructuring the 
economy. The first national development plan, 1962-
1968, was developed to put the economy on a fast 
growth path. The plan gave adequate priority to 
agriculture and industrial development as well as training 
of high-level and intermediate manpower. However, the 
disruptions to economic activities during the period later 
paved way for broader economic policies for 
reconciliation and reconstruction. The second national 
development plan, 1970-1974, was launched primarily to 
reconstruct and rehabilitate infrastructure that had been 
damaged during the civil war. Thus, the government 
invested a lot of resources into the construction and 
rehabilitation of infrastructure as well as improving the 
incomes of the people.  

The Indigenization Decrees of 1972 and 1974 put the 
commanding heights of the Nigerian economy in the 
hands of Nigerians within the context of nationalism. The 
third national development plan, 1975-1980, was 

 
 
 
 

 

designed under a more favorable financial condition of 
huge oil revenues that accrued to the nation from the 
mid-1970s. However, the execution/implementation of the 
fourth national development plan, 1981-1985, was 
affected by the collapse of the international oil prices. In 
1982 the government introduced the Economic 
Stabilization Act as an immediate reaction to dwindling oil 
earnings and major external sector imbalances. Sanusi 
(2010) noted that this was aimed at reducing government 
expenditure and conserving foreign reserves in order to 
improve the country‟s balance sheet. It was however 
found that there was need for a more fundamental reform 
to compliment the austerity measures. In 1986, the 
government accepted the IMF-sponsored Structural 
Adjustment Programme (SAP). The SAP aimed at 
removing cumbersome administrative controls and 
creating a more market-friendly environment underpinned 
by measures and incentives that would encourage private 
enterprise and more efficient allocation of resources. One 
might argue the SAP recorded some measure of 
success. However, some of the gains of the SAP were 
eroded following the increased spate of policy reversals 
between 1988 and 1989.  

Up to 1990, the economy witnessed some gains which 
were associated with increased deregulation and 
liberalization in economic management. However, owing 
to policy slippages, there was a reversal of trends in 
major macroeconomic aggregates thereafter, resulting 
from policy reversals and inconsistencies. Generally, 
frequent policy inconsistencies and reversals that 
characterized the period under review created distortions 
in the economy and were further compounded by external 
shocks, including the external debt overhang. Overall, 
SAP failed to realize the goals of creating wealth and 
promoting sound economic development as most of the 
policies were terminated prematurely or reversed out 
rightly.  

The experimentation with deregulation and libera-
lization was truncated in 1994 with the advent of a military 
government. Thus, the Federal Government reregulated 
the economy, by capping exchange and interest rates 
due to high nominal interest rates that reached an all-time 
high of 48.0% in commercial banks and 60.0% in non-
bank financial institutions. These rates were in turn driven 
by the high rates of inflation at 48.8% in 1992 and 61.3% 
in 1993. As there was no clear economic strategy for the 
rest of the decade, the monetary policy implementation 
became ineffective to check expansionary fiscal 
operations. In addition, weak institutions and an 
unfriendly legal environment reduced the benefits that 
would have accrued to the economy (Sanusi, 2010). 
However, the scenario changed in 1999, with the return 
of democratic governance in the country. Democratic 
governments have introduced series of reforms that were 
aimed at redressing the distortions in the economy and to 
restore economic growth following the period of economic 
decline. In 2004 the government‟s 



 
 
 

 

 60 
 

 50 
 

P
er
ce
n
ta
ge

 
40 

 

30 
 

 
 

 20 
 

 10 
 

 0 
  

1960-1970 1971-1980 1981-1990 1991-2000 2001-2009 
 

Years 
 

Figure 1. Sectoral contributions to GDP. 

  
  

 
 
 
 
 
 
 
 
 

 

 Agric 
 

 Industry 
 

 Manu 
 

 Services 

 

 

 

economic agenda was formally launched and tagged the 
National Economic Empowerment and Development 
Strategy (NEEDS). 
 

 

Structure of the Nigerian economy 

 

Structurally, the Nigerian economy can be classified into 
three major sectors namely primary/agriculture and 
natural resources, secondary-processing and manufac-
turing, and tertiary/services sectors. The economy is 
characterized by structural dualism. The agricultural 
sector is an admixture of subsistence and modern 
farming, while the industrial sector comprises modern 
business enterprises which co-exist with a large number 
of micro-enterprises employing less than 10 persons 
mainly located in the informal sector. The agricultural 
sector has not been able to fulfill its traditional role of 
feeding the population, meeting the raw material needs of 
industries, and providing substantial surplus for export. 
Indeed, the contribution of the sector to total GDP has 
fallen over the decades, from a very dominant position of 
55.8% of the GDP in 1960-1970 to 28.4% in 1971-1980, 
before rising to 32.3, 34.2 and 40.3% during the decades 
1981-1990, 1991-2000 and 2001-2009, respectively 
(Figure 1). The fall is not because a strong industrial 
sector is displacing agriculture but largely as a result of 
low productivity, owing to the dominance of peasant 
farmers and their reliance on rudimentary farm equipment 
and low technology. Another feature of the sector is 
under-capitalization which results in low yield and 
declining output (Sanusi, 2010).  

The industrial sector comprises the manufacturing, 
mining (including crude petroleum and gas) and electricity 

 
 

 

generation. Prior to independence in 1960, the Nigerian 
economy was mainly agrarian. On attainment of 
independence, the Nigerian government embarked on the 
programme of transforming the country into an industrial 
economy. The Nigerian manufacturing sub-sector is 
made up of large, medium and small enterprises, as well 
as cottage and hand-craft units. In spite of spirited efforts 
made to boost manufacturing output and various policy 
regimes, manufacturing has not made any significant 
contribution to the growth of the economy. Industry as a 
whole contributed only 11.3% of the GDP in 1960-1970, 
growing significantly in the next two decades to a high of 
41.0% in 1981-1990, owing largely to the crude 
petroleum and gas production during the decades. The 
contribution contracted to 38.6% in the 1990s and further 
to 29.4% during 2001-2009. These numbers, in fact, belie 
the poor contribution of the manufacturing sub-sector to 
aggregate output in Nigeria compared with its peers in 
Asia and Latin America. Indeed, the contribution of the 
manufacturing component has on average been below 
5.0% in the last two decades. Even the relatively high 
contribution of oil sector to the industrial sector 
contribution is being driven largely by crude production 
and not by the associated “core industrial” components 
like refining and petrochemicals. The contribution of 
wholesale and retail trade and services has more or less 
remained stable while that of building and contribution 
rose sharply from 5.3% in the 1960s to 8.3% in the 1970s 
but fell consistently, thereafter, to 1.8% during 2001-
2009. During and some few years after SAP, the main 
manufactured exports were textiles, beer and stout, 
cocoa butter, plastic products, processed timber, tyres, 
bottled water, soap and detergents as well as iron rods. 



     
 
 

 

 9 
 

 8 
 

Pe
rc
en

ta
g

e 

7 
 

6 
 

  

 5 
 

 4 
 

3 

2 

1 

0 
 
 
 

 

Period 
 

Figure 2. Average growth rate of real GDP. 
 
 

 

However, some of these products have disappeared 
from the export list owing to poor enabling environment. 
The components of the mining sub-sector in Nigeria are 
crude petroleum, gas and solid minerals. Prior to the 
advent of petroleum minerals such as coal and tin were 
the main mineral exports. However, with the emergence 
of crude oil, the relative importance of solid minerals 
diminished. Indeed, since the 1970s, the largest mining 
activity has been crude oil production, which became 
dominant in terms of government revenue and export 
earnings. Lately the production of gas has gained 
increased attention, as the export potential of gas has 
reduced the dominance of crude oil (UNIDO, 2002). 
 

 

Performance trends 

 

The average growth rate of real GDP, which was 5.9% in 
the period 1960-1970, rose to 8.0% in 1971-1973 (Figure 
2). The Nigerian economy expanded rapidly, as oil 
production and export rose phenomenally. However, 
activities in the service sub-sector were relatively modest 
even though marketing and advertising, which covers 
distributive trade, lagged behind. The average GDP 
growth rate later dropped to 3.2% during 1976-1980. This 
level was sustained in the period 1982-1990 following 
improved performance in agricultural and industrial sub-
sectors.  

Suffice it to state that GDP responded favorably to the 
economic adjustment policies of the eighties during which 
the SAP and economic liberalization were adopted. Thus, 
annual GDP grew from a negative 0.6% in 1987 to 13.0% 
in 1990. However, the average growth rate of real GDP 
dropped to 1.9% during 1991-1998. This was in spite of 
the favorable developments in the agricultural and 
services sub-sectors of the economy. Real GDP growth 
rate rebounded to 8.3% during the period 1999-2007, 
reflecting improved economic policy of NEEDS era. 

 
 
 
 
 
 
 
 
 
 
 
 

 

 Real GDP 
 
 
 
 
 
 
 
 
 
 
 
 

 

Despite the decline in real GDP growth rate to 6.3% in 
the period 2008-2009, the major drivers remained 
agriculture, wholesale and retail trade, and services 
sectors. Indeed, the last decade has been a period of 
rebirth as affirmed by almost all macroeconomic 
indicators (Table 1). But the growth rate has not been 
high enough to push down the poverty profile.  

Indeed, the Nigerian economy has not experienced 
remarkable transformation and restructuring. Equally 
important is the indication that since 1999, Nigeria has 
become a trading outpost for goods produced elsewhere 
with little domestic transformation of the output of primary 
sectors by the secondary sector. This is particularly so 
since the Nigerian agriculture is really peasantry and the 
high contributions of tertiary sector to output suggest that 
the sector is not really servicing the Nigerian economy 
but, indeed, the economies of her trading partners. Thus, 
the Nigerian economy is still dominated by the primary 
sector, followed rather closely by the tertiary sector with 
the contribution of the secondary sector remaining 
insignificant. Little wonder the diversification index 
remained below 0.4% through the review period, the 
barrage of reforms notwithstanding.  

The Nigerian economy is import dependent with very 
little non-oil exports. It relies heavily on crude oil and gas 
exports with other sectors trailing far behind. For 
example, crude oil accounts for about 90% of foreign 
exchange earned by the country while non-oil exports 
account for the balance (Table 2). The economy is, 
therefore, susceptible to shocks in the oil industry. In 
recent times, these shocks have been caused by either 
developments in the International crude oil market or the 
restiveness in the Niger Delta region of the country. 
Agriculture and other mining (besides oil and gas) have 
been abandoned to the rural poor. Economic and social 
infrastructure, especially power is grossly dilapidated. 
The power sector is generally recognized as a binding 
constraint on Nigerian economy. Poor corporate 



  
 
 

 
 Table 1. Selected macroeconomic indicators.  
 
 Indicator 2003 2004 2005 2006 2007 2008 2009 Average 

 Real GDP growth rate 9.57 6.58 6.51 6.0 6.5 6.4 6.7 6.2 

 Inflation(y-on-y) 13.9 15.4 17.9 8.5 6.6 15.1 12.0 13.3 

 Growth in M2 24.97 12.26 34.61 30.6 44.2 58.0 17.1 31.8 

 Current account balance/GDP 6.95 17.62 28.23 18.5 11.8 17.5 11.9 13.4 

 FDI (US$ billion) 2.0 1.86 4.98 13.9 5.6 5.8  4.3 

 External reserves (US$ billion) 7.47 16.95 28.3 42.3 51.3 58.0 42.4 27.0 

 Exchange rate (end-period) 129.4 133.5 132.15 128.2 117.9 132.5 149.58 125.8 

 External debt (US$) 3.3 3.5 3.5 3.5 3.6 3.7 3.9 3.21 
 
Source: CBN annual report and statement of accounts various issues. 
 
 

 
Table 2. Composition of Nigerian exports.  

 
Component 2004 2005 2006 2007 2008 2009 

Oil exports 97.5 98.3 97.8 97.9 99.0 95.8 

Total non oil export 2.5 1.7 2.2 2.1 1.0 4.2 

Non oil       

Agric 33.0 41.9 37.8 39.7 58.3 46.9 

Minerals 2.0 4.0 8.5 6.3 7.7 6.7 

Semi-manufactured 48.9 40.6 37.9 39.4 17.0 29.2 

Manufactured 5.0 9.8 11.1 10.3 8.7 9.1 

Other exports 11.2 3.9 4.7 4.3 8.3 8.1 
 

Source: CBN annual reports and statements of accounts various issues. 
 
 

 

governance, both in the public and private sectors have 
led to high incidence of corruption and inequity in income 
distribution.  

A review of the statistics from comparable countries 
shows that the share of primary commodities in total 
exports is 20.0% for Malaysia, 24.0% for India, 12.0% for 
China. For developed countries it is 17% for Britain and 
America and 9% for Japan. In Nigeria, the primary sector 
contributes 99% of exports with only 1.0% coming from 
the secondary sector (Table 3). 
 

 

Growth drivers 

 

In Nigeria, agriculture dominates the primary sector, 
which dominates the entire economy. The population of 
the country has grown by about 150.0% between 1963 
and 2006, approximately 3.75% per annum. A simple 
calculation shows that for the per capita income to remain 
the same as in the 1960s, every sector of the economy 
should at least have grown by the same percentage. But 
the agricultural sector which is the mainstay of the 
economy has declined in its contribution to the GDP, 
manufacturing has declined, building and construction 
has also declined, while the wholesale and retail trade as 
well as the services sectors have remained almost the 

 
 
 

 

same as in the 1960s. Applying the Harrod-Domar
1
 

model, this implies that assuming a capital-output ratio of 
5.0% and a savings ratio of 15.0%, the economy would 
grow at 3.0%; of course, the savings ratio depends on the 
difference between the population growth rate and the 
growth rate of the GDP (the economy). Figure 2 shows 
an average growth rate of real GDP of 5.3% in the period 
1960-2009. If the average population growth rate of 3.8 is 
deducted from 5.3, we are left with a GDP growth rate of 
1.5% of which no meaningful savings can be made. In 
effect, the economy has not been growing in real terms 
over the years. For Nigeria to make a quantum leap, the 
economy has to grow by at least double digit rates for a 
sustained period of time. 

 

Challenges facing the Nigerian economy 
 
Nigeria is a mono-product economy with the bulk of 
government revenue coming from oil exports which is 
susceptible to shocks in the international oil market. 
Moreover, many other solid minerals with which the 
country is richly endowed with remain generally untapped.  
 
1 

Harrod – Domar model is used in development economics to explain an 
economy’s growth rate in terms of the level of savings and productivity of 

capital. 



 
 
 

 
Table 3. Composition of exports in selected developed and developing countries 2000.  

 

Developing countries 
Export as a Percentage share of Percentage share of 

 

percentage of GDP primary commodities manufactured goods  

 
 

Malaysia 110.0 20 80 
 

Indonesia 40.7 46 54 
 

Jamaica 19.6 30 70 
 

Philippines 53.2 59 41 
 

Bangladesh 11.9 9 91 
 

Nigeria 48.7 99 1 
 

Venezuela 27.2 88 12 
 

Sri Lanka 33.0 25 75 
 

Kenya 15.9 77 23 
 

South Korea 37.8 9 91 
 

Togo 25.0 82 18 
 

Mexico 29.0 15 85 
 

India 8.3 24 76 
 

Brazil 9.4 46 54 
 

China (excluding Hong Kong) 23.1 12 88 
 

Developed countries    
 

United Kingdom 19.8 17 83 
 

United States 7.9 17 83 
 

Japan 10.2 6 94 
 

 

 

More fundamentally, the economy has disproportionately 
relied on the primary sector (subsistence agriculture and 
the extractive industry) without any meaningful value 
addition. In light of this, the little growth recorded in the 
economy, thus far, has been without commensurate 
employment, positive attitudinal change, value 
reorientation, and equitable income distribution, among 
others. These could be attributed to poor leadership, poor 
implementation of economic policies, weak institutions, 
poor corporate governance, endemic corruption, etc. The 
challenge, therefore, is how to deploy/manage the 
receipts from the oil and gas exports to achieve the 
highest value for money in the economy; develop on a 
sustainable basis, the many untapped solid minerals; 
improve agricultural productivity by cultivating more of the 
available arable land with improved technology; process 
and preserve primary produce with the aim of increasing 
value addition; manufacture the basic durable and non-
durable goods needed by Nigerians and the West African 
sub-region, market and ultimately looking at export such 
goods and sustain manufacturing by providing the core 
industries; and remain competitive by developing and 
improving on the investment climate of the country. 
These challenges have remained largely unresolved 
owing to the myriad of problems: 

 

(i) Macroeconomic challenges: The Nigerian macro 
economy is still characterized by rigidities, dualism and 
the false paradigm model. Generally, the sectors of the 
economy are in silos to the extent that the primary sector 

 

 

does not relate meaningfully with the secondary sector 
and the same for the secondary and the tertiary sectors. 
Agricultural produce end up as final consumer goods as 
only a small quantity is processed or used as raw 
materials for the local manufacturing industries. Also, the 
produce of the extractive industries are exported in their 
raw forms without local value addition. Given the higher 
incomes in the oil and gas sub-sector of the extractive 
industry, attention is concentrated there to the almost 
total neglect of the mainstream economy. Consequently, 
the economy is broken into the very rich (relying on the oil 
and gas industry) and the very poor (relying on the 
mainstream economy) with almost a complete vacuum in-
between these two. The false paradigm model also plays 
out in the sense that while the few very wealthy group 
clamour for relevance in the context of “experts” advice, 
the very poor suffer from ignorance, disease and 
malnutrition. Thus, there is no structural change and,  
hence, the attitudinal changes of economic 
transformation are absent (UNIDO, 2002);  
(ii) Infrastructural challenges: one of the main challenges‟ 
facing the economy is poor economic and social 
infrastructure: bad roads, erratic power supply, limited 
access to portable water and basic healthcare, and much 
more. Building a vibrant economy or restoring growth to a 
sluggish economy takes resources. To ensure long-term 
growth and prosperity, Nigeria must use its resources 
wisely, invest in advanced technology and rebuild the 
infrastructure without which the economy will not gain 
from the “power of productivity” (Sanusi, 2010). A nation 



 
 
 

 

enjoys higher standards of living if the workers can 
produce large quantities of goods and services for local 
consumption and extra for export. The deficiencies in the 
economy lead to low productivity, poor quality products 
and non-competitiveness in the global market place;  
(iii) Poor institutions and corporate governance: another 
important challenge to sustainable economic growth in 
Nigeria is lack of effective institutions and good 
governance. These factors have been hindering various 
efforts and reforms of the government to stimulate 
economic growth for sustainable development in Nigeria. 
The prevalence of weak institutions and poor corporate 
governance as well as poor ethical standards in most 
public and private organizations, hinder the attainment of 
the goals of economic policies in the country (UNDP, 
1997; Shabbir, 2004). Poor corporate governance has 
adversely affected the quality of institutions to the extent 
that public and private institutions are used for selfish 
interests, thereby, making regulation and law 
enforcement ineffective;  
(iv) Corruption challenges: although corruption is a global 
scourge, Nigeria appears to suffer particularly from it. 
Everyone appears to believe that the nation has a 
“culture of corruption” (UNDP, 2002). Over the years, 
Nigeria has earned huge sums of money from crude oil, 
which appears to have largely gone down the sinkhole 
created by corruption. In an article, “Oil giant that runs on 
grease of politics,” Nigeria was described as a rich nation 
floating on oil wealth “but almost none of it flows to the 
people” (San Francisco Chronicle, March 11, 2007). 
Corruption has denied Nigerians the value of the petro-
dollar that has accrued to the country over the years. The 
failure of infrastructure, political and ethical standards as 
well as moral and educational standards can easily be 
traced to corruption;  
(v) Low quality of education: education is an important 
factor in economic growth and development but the 
nation‟s educational system has been facing myriad of 
challenges, which prevent the country from achieving its 
economic objectives. The problems include inadequate 
funding and planning and management, inadequate 
infrastructure, irrelevance of curricula to industrial needs 
and inadequate commitment on the part of students and 
teachers, among others. All these have combined to 
hinder the production of a high quality work force to 
propel the economy (UNESS for Nigeria: 2006-2015). As 
Dike (2006) noted, the state of a nation‟s educational 
sector, among other things, determines the economic 
health of the nation;  
(vi) The Dutch disease

2
: since the oil price boom of the 

early 1970s, the country abandoned the agricultural and 
industrial sectors of the economy to the old and weak. 
Both the public and private sectors of the economy 
concentrate their efforts in the oil and gas industry to the  

 
2 

Dutch Disease is resource boom leading to the decline of the erstwhile 
tradable sector. 

  
  

 
 

 

extent that the mainstream economy is denied funding, 
requisite investment and even managerial capabilities. 
Thus, the mainstream economy has become 
uncompetitive globally while the country has turned into a 
trading outpost for foreign companies. This has hindered 
the much-needed transformation of the economy in the 
last four decades.  
(vii) Poor investment climate: the consequence of all that 
have been said above is the poor investment climate in 
the economy that has rendered the economy 
uncompetitive. In the absence of adequate infrastructure 
(power, roads, water, etc.) the cost of doing business in 
the country remain high, forcing to neighboring countries 
even companies that had existed in Nigeria for upwards 
of four decades. 
 

 

Prospects for the economy 

 

Economic growth, especially in a developing country like 

Nigeria, must be people-oriented. Therefore, pro-poor 
policies and those that improve on the welfare of a 

majority of the people should be emphasized. It is fair to 

say that a broad consensus exists among key 

stakeholders in the Nigerian economy, government, 
private sector, households, and external actors-on  
WHAT  to  do  to  get the  economy  going  [see  various 

government policy  documents  for  various  sectors, the 

Obasanjo economic direction, 1999-2003; the vision 2010  
Reports;  various  summary  reports  of  annual  economic 
summits, World Bank‟s country assistance strategy 

papers  (2001,  2002),  IMF‟s memorandum  of  Article IV 

consultations, etc.)]. It is broadly agreed that the 

challenge of development should be that of rapid growth 

with inclusion/poverty reduction, and that the key vehicle  
to  achieve  it  should  be  a  shift  from  statism  and  rent- 
seeking to a private sector-led, competitive market 
economy framework.  

In summary, Sanusi (2010) observed that this growth 
prospect can be achieved and sustained if: 
 
1. The balance of trade is persistently positive, as it has 
been in the last five years;  
2. External reserves can be substantially built up to boost 
the credit worthiness of the economy and attract foreign 
investment;  
3. Efforts are sustained to maintain peace in Niger Delta 
to boost crude oil and gas output;  
4. Electricity supply is increased to 15,000-25,000 
Megawatt between now and 2020, to boost manufactu-
ring capacity utilization and activities in other critical 
sectors;  
5. The banking sector reforms and efforts to resolve 
liquidity challenges are sustained to channel credit 
massively to the real sector of the economy;  
6. Government sustains the current reforms in the various 
sectors of the economy to achieve rapid growth and 
development; 



 
 
 

 
Table 4. Selected economic indices for Nigeria and Malaysia.  

 
Indicator Country 2006 2007 2008 2009 2010 

 

Real GDP (%) 
Malaysia 5.8 6.2 4.6 -1.7 10.1 

 

Nigeria 6.0 6.5 6.4 6.7 
 

 

  
 

Inflation (%) 
Malaysia 3.6 2.0 5.4 0.6 1.3 

 

Nigeria 8.5 6.6 15.1 12.0 
 

 

  
 

External reserves (US$ billion 
Malaysia 82.4 101.3 91.4 96.7 96.0 

 

Nigeria 42.3 51.3 53.0 42.4 
 

 

  
 

Sectoral contributions to GDP (%)      
 

Sector Country 1970 1990 2000 2008 2009 
 

Agriculture 
Malaysia 33.6 19.3 8.8 7.5 7.7 

 

Nigeria 55.8 32.3 34.2 
 

40.3  

  
 

Manufacturing 
Malaysia 12.8 26.5 32.6 29.6 26.9 

 

Nigeria 6.6 6.1 4.9 
 

3.9  

  
 

Services 
Malaysia 42.6 42.1 53.0 54.3 57.4 

 

Nigeria 15.3 9.8 11.5 
 

15.5 
 

  
 

 
Source: Economic Bulletins of Central Bank of Nigeria and Bank Negara, Malaysia. 

 

 

7. We increase agricultural output barring adverse 
weather conditions, with continued implementation of 
various government programmes, especially preserving, 
processing and marketing activities;  
8. We sustain the growth in the services sector, by 
increasing the local content of the industry and by 
expanding the tele-density of the country;  
9. We deregulate the downstream petroleum sub-sector 
and encourage the setting up of private refineries;  
10. Diversify the economy away from primary products 
and away from crude oil and natural gas;  
11. Improve other key economic and social infrastructure; 
and sustain the subsisting democratic governance. 
 
The global environment for development has changed 
quite significantly in recent years, with the rapid growth in 
world trade, capital flows and information and 
communications technology. Nigeria can benefit from 
these changes by providing a more conducive investment 
climate in the country. 

 

Lessons for Nigeria from the Malaysia experience 
 
Nigeria and Malaysia share common historical 
antecedent. They gained their independence from British 
rule. They federal system of government is practiced with 
bicameral legislature and the regions are inhabited by 
different racial and ethnic nationalities. Both economies 
were relatively resource rich. At independence, Malaysia 
in 1957 and Nigeria in 1960 were leading exporters of 
primary product because basically the climate in the 

 
 

 

countries is tropical. A comparison of Malaysia and 
Nigeria‟s growth record shows divergence in growth 
rates, and differing structural changes to the economy. 
Malaysia, on average has grown at a faster rate than 
Nigeria. In contrast to Malaysia‟s post-independent 
experience, political instability was more pronounced in 
Nigeria. The military has ruled for 25 out of its 50 years 
as an independent nation. In Malaysia there was, 
relatively, political stability and continuity, no changes in 
government and the present coalition government is still 
in power, after more than 50 years. Some key economic 
indices are presented in Table 4 to show the disparity in 
economic growth.  

Malaysia achieved sustained growth of about 6% per 
annum growth for the past 50 years. It maintains large 
external reserve in comparison to Nigeria and has 
continued to maintain low inflation rates. Agriculture‟s 
share of GDP in 2009 has fallen to 7.7 from 33.6% in 
1970, compared to Nigeria‟s 55.8% in 1970 and 40.3 per 
cent in 2009. Manufacturing in Malaysia accounted for 
12.8% in 1970 and 26.5% in 2009 compared to Nigeria‟s 
6.6% in 1970 and 15.5% in 2009, while the contribution of 
the service sector has increased to 57.4% in 2009, it 
stood at only 15.5% in Nigeria. The two countries have 
adopted almost the same ideology in their developmental 
efforts, while Malaysia plans and moves vigorously 
towards the attainment of its vision of becoming an 
advanced economy in 2020. Nigeria in its Vision 2020 
which to become one of the 20 most industrialized 
economies by the year 2020, not much has been seen in 
this direction. 



 
 
 

 

The possible lessons from Malaysia‟s growth expe-rience 
for Nigeria could be summarized as thus explained 
 

 

Resource curse 

 

Resource curse is avoidable and growth can be 
sustained. Malaysia is a relatively resource rich economy 
with its supply of land, and has exploited its land for the 
production of tin, rubber and palm oil. Petroleum 
resources have become important from the mid-1970s. 
 

 

Diversification 

 

Diversification is essential for growth. The diversification 
strategies involved intra agricultural diversification, 
utilizing resources to raise productivity and diversification 
from tin and rubber into oil palm, and diversification from 
agriculture to manufacturing industries. 
 

 

Openness 

 

Openness and international integration is helpful for 
growth. International trade and long-term capital flows 
made important contributions to the growth of the 
Malaysian economy. Integration with Asian economies 
was of growing importance. 
 

 

Export-led growth 

 

Exports were an important source of growth and trade 
intensity has increased. The growth of labour intensive 
manufacturing industries absorbed the surplus labour, 
especially from the rural areas, which opened up 
employment opportunities and raised income levels. 
 

 

Human capital 

 

Education has played a crucial role in sustaining 
economic growth and raising incomes of households. 
Large public investment in education as it is a necessity. 
Private education should be encouraged and can 
supplement the supply of human capital. 
 

 

Stable prices and low inflation 

 

Growth with low inflation is possible. Inflation, with rare 
exceptions, in Malaysia has averaged less than 3% for 
the past 30 years. A combination of price controls, 
subsidies and an open economy has helped to contain 
inflation. 

  
  

 
 

 

Full or near-full employment 

 

Sustaining full employment with an unemployment rate of 
about 3% is attainable. But relatively high levels of growth 
put pressure on labour supply and utilising immigrant 
labour has been necessary. A ready supply of low cost 
immigrant labour can discourage the upgrading of labour. 
 

 

Private investment 

 

Private investment, domestic as well as foreign direct 
investment (FDI), is vital for economic growth as reliance 
on substantial public investment is not sustainable. 
Competition for FDI has and will intensify, policy reforms 
and strong institutions will be needed to attract and retain 
FDI. 
 

 

Fiscal discipline and managing revenue 

 

Fiscal discipline and strict management of revenue, 
including resource revenues, is essential for macro-
economic stability. Containing the fiscal deficit and the 
national debt is essential for avoiding imbalances. 
Additional discipline through legal and administrative 
guidelines should assist the management of revenue. 
 

 

Industrial policies and foreign direct investment (FDI) 

 

Industrial policies are important for economic diversi-
fication and FDI. Export-led growth of manufactured 
products needs to be supported by fiscal incentives and 
infrastructure support, including industrial estates and 
free trade zones (FTZs). FDI can make important 
contributions to the growth of manufacturing industries 
and exports. 
 

 

Federal constitution and governance 

 

Federal constitution can provide a strong framework for 
the governance of politics of oil and forestry resources. 
Regional interests to claim a larger share of revenue and 
resources have to be managed. Weaker state/regional 
government can dissipate revenue. 
 

 

Strong independent national oil corporation 

 

Importance of relative independence, capacity and capa-
bility of national oil corporation is needed. The capability 
and capacity of Petronas, the national oil corporation, has 
been crucial in the management of revenue from 
petroleum. The capture by vested interests over the 
national corporation should be resisted. 



 
 
 

 

Conclusion 

 

The prospects for growth in Nigeria are very bright going 
by the achievements recorded during the last ten years 
and the current reforms in the various sectors. However, 
for Nigeria to consolidate these economic gains and 
move higher in the frontlines of growth and development, 
it must deepen reforms that improve human capital, 
promote high-quality public infrastructure and encourage 
competition (Sanusi, 2010). The pillars to sustain this 
consolidation must include a firm fiscal policy, transparent 
fiscal operations, development-oriented monetary and 
exchange rate policies, strengthening of the financial 
sector and strict adherence to the rule-of-law and respect 
for the sanctity of contract, as well as commitment to 
fighting corruption and corrupt practices. In all of these, 
Nigeria has opportunity for progress. We must break 
away from the past to deliver a new Nigeria that the 
future generations of Nigerians would be proud of. Our 
electoral process must not only be credible, but must be 
seen to be credible, since robust economic performance 
necessarily requires a robust political environment to 
happen. 
 

 
REFERENCES 
 
Addison K (2002). Nigeria: Policy Options for Growth and Stability in a 

challenging Environment. The World Bank, June 2002.  
Ahmad E, Singh R (2002).”Political Economy of Oil Revenue Sharing in 

a Developing Country: illustration from Nigeria” in IMF Working paper: 
Washington: International Monetary Fund).  

AIAE (2003). African Institute of Applied Economics (AIAE) 
(2003).Nigeria: Macroeconomic Assessment and Agenda for 
Reforms. World Bank assisted country report. 

 
 
 
 

 
Ajakaiye DO (1990). Inter-Industry Linkages in the Nigerian Economy 

1973–1977, NISER Monongraph Series No 2 NISER, Ibadan. 
Ajakaiye DO (1996). Public Enterprises Reforms in West Africa: Issues  

and Research Agenda”. Res. Dev., 11(1&2): 13-24.  
CBN (2010). Central Bank of Nigeria Annual Report and Statement of 

Accounts, CBN, Abuja.  
Dike VE (2006). “Youth Unemployment in Nigeria:The Relevance of 

Vocational and Technical Education,” in NESG-Economic Indicators, 
12(3): 25-29.  

European Development Report (EDP) (2001).Programming Study for 
Nigeria-Infrastructure Report No 11/14.  

National Poverty Eradication Programme (NAPEP) (2001). A Blueprint 
for Success.  

Okonja-Iweala N, Soludo CC, Muktar M (2003).”The Debt Trap in 
Nigeria, towards a sustainable debt strategy, Eritrea, Africa World 
Press Inc. 

Sanusi LS (2010).Growth prospects of the Nigerian Economy. Eighth 
Convocation lecture of the Igdinedion University, Okada, Edo State, 
Nigeria.  

Shabbir CG (2004). „From public administration to governance: the 
paradigm shift in the link between government and citizens.‟ Paper 
presented at the 6th Global Forum on Reinventing Government, with 
a theme, Towards Participatory and Transparent Governance, 24–27 
May 2004.  

UNDP (2002). United Nations Development Programme, Deepening 
Democracy in a Fragmented World, New York, Human Development 
Report 2002. 

UNDP (1997). United Nations Development Programme, Governance 
for Sustainable Human Development: A UNDP Policy Paper, New 
York, UNDP, 1997.  

United Nations Industrial Development Organization (UNIDO) 
(2002).Nigeria: Competitive Future: A concept Note.  

World Bank (2001).” Nigeria: Poverty in the Midst of Plenty, The 
Challenge of Growth with Inclusion.  

World Bank (2002).Nigeria States Finances Study – Decision Draft 
World Bank, June, 2002. 


