For decades Nigeria’s economy was characterised by the growing dominance of the public sector, over-reliance on a single commodity and the pursuit of an import-substituting industrial strategy. Consolidated government expenditure is budgeted at 40% of GDP in 2004, having peaked at 47% in 2001, while oil alone constitutes 40% of GDP, 95% of foreign exchange earnings and 70% of fiscal revenue. The National Economic Empowerment and Development Strategy (NEEDS), the government’s blueprint for economic reform, reflects policy markers’ acknowledgement that growth based on expansionary public expenditure, import-substitution industrialisation and reliance on the export of a few primary commodities is neither efficient nor sustainable.
In addition to a number of weak development indicators – two-thirds of the population below the poverty line and falling per capita incomes – a more telling indictment of Nigeria’s recent industrial strategy is the dismal state of its industrial base, declining industrial output and low capacity utilisation (just 26% in 2000 but improving). In 2003, manufacturing accounted for just 3.8% of GDP.
