by Guy Arnold
It was at this time that the Minister of Industry, Belaid Abdessalem, made the famous prediction that Algeria was going to become “Africa’s first and the world’s second Japan”.’6 Michael Field, the author of the above quote, tries to find an answer to Algeria’s spectacular failure and descent into civil war at the end of the century and, as he says: ‘It is because everybody was so impressed by Algeria in its first 20 years of independence that the disasters of the late 1980s and 1990s came as such a surprise.’ There was a switch from unattractive (humourless and austere) success to complete economic, social and political failure and that was far from easy to understand. ‘During the period of President Boumedienne, from 1965 to 1978, which is when the institutions of the republic became established, power was in the hands of the President and the military men closest to him.’ The regime was a dictatorship, ‘But because of its fashionable socialist credentials and the mood of optimism that surrounded the oil states’ development projects at that time, it was given a greater reputation for enlightened dictatorial rule than it deserved.’7 That may be true but it does not explain the subsequent industrial failure. Rather, Boumedienne presided over the creation of a spectacular shell. Thus, the government used its oil revenues to pay foreign constructors to build industrial plants and then announced that Algeria had become self-sufficient in the products the plant produced. But these newly created industries did not operate at a profit and many of the factories were too big and sophisticated to be efficiently managed by a workforce that was simply not equipped with the right skills, despite the government’s huge educational programme, to run such establishments effectively. Many of the workers came straight to the cities from a primitive rural background. Most industries were unable to compete with imports into the home market, let alone compete in export markets so the government kept them going with subsidies from its oil revenues and in this way disguised the failure of its industrialization programme to deliver according to expectations. The agrarian revolution also failed to deliver, partly because it was run by bureaucrats, and so, despite good agricultural land, a country that had fed itself under the French began to import essential food. Had Boumedienne lived, he might have had the drive and ruthlessness to correct these failings once they became too obvious to hide but his successor was not in that mould and the FLN, which in its revolutionary days might have been able to set things right, had long been politically ineffective. And so the Algerian dream of the 1970s collapsed in the 1990s.
NIGERIA
When Nigeria became independent in 1960 there were plenty of predictions that it would develop into Africa’s leading market and there were adequate reasons for believing that this should be the case. ‘The incorporation of Nigeria into the world economy was achieved through the expansion of peasant commodity production. There was little plantation agriculture in Nigeria and a large landowning class was absent. Commodity production provided the economic foundation for the operations of foreign merchant capitalists and the regional pattern of power and wealth that was consolidated in the 1950s.’8 Thus, at independence, Nigeria was an agriculture-based economy since industrialization had been discouraged by the colonial regime. However, encouraged by the new oil developments, which provided a base, industrialization soon took off. The average growth of manufacturing output was 13.6 per cent between 1963 and 1967, 10.2 per cent between 1967 and 1972 (the period covering the civil war), and 13.3 per cent between 1973 and 1978. The share of manufacturing in the GDP rose from 5 per cent in 1960 to 9 per cent in 1972 and much of this was concentrated in the consumer sector.9 ‘Apart from textiles, other products experiencing fast growth in the 1970s were vehicle assembly, soaps and detergents, soft drinks, pharmaceuticals, beer, paints and roofing sheets. Six highly protected and subsidized vehicle assembly plants were set up in quick succession.’ Car assembly plants included Volkswagen in Lagos and Peugeot in Kaduna; truck assembly included Leyland (Ibadan), Steyr (Bauchi), Fiat (Kano) and Daimler-Benz (Enugu).10 Apart from oil, economic growth during the 1970s was very mixed. Industrial protection discriminated against agriculture and agricultural exports were discouraged because of the appreciation of the naira as a result of large oil revenues. The changeover from relying upon agricultural commodity exports to over-dependence upon oil exports and their revenues was very rapid, and the great mistake that Nigeria made was to depend increasingly upon oil revenues to solve its problems despite periodic insistence upon policies of diversification that did not take place. In 1960 cocoa, groundnuts and palm produce accounted for 80 per cent of exports; from 1974 onwards, crude petroleum accounted for 90 per cent of exports. Nonetheless, over the 20-year period 1960–80 GNP grew at an average rate of 6 per cent a year. An indication of the uneven nature of Nigeria’s development was the extent to which it remained dependent upon expatriates for industrial management. There were, moreover, huge salary differentials with non-Nigerian managerial and professional employees in the industrial sector earning, on average, more than twice as much as Nigerians in the same categories. The Nigerians reacted impetuously to the oil boom and, for example, between 1974 and 1976 the Third National Development Plan was enlarged several times in real terms from an initial projected federal government spending of N3 billion to N8 billion while the flow of imports was so increased in 1975 that delays in berthing at Nigerian ports, and especially at Lagos, ran into months while a queue of several hundred ships formed in the Lagos roadstead. Free spending was the order of the day and by 1976 the balance of payments was in deficit and by 1978, after a fall in oil sales, the government dealt with a negative trade balance by raising loans on the euro-currency market. Oil wealth appeared to have mesmerized Nigerians in general and the government in particular. The rise in oil prices between 1978 and 1981 provided Nigeria with a large extra income and the country responded with alacrity to its increased revenues: Federal outlays went up from N7.6 billion to N14.8 billion for 1978/79 to 1979/80 although this euphoria was quickly dispelled by an oil glut in 1981 and spending had to be cut back sharply.11
The end of the civil war saw little desire for vengeance and much fraternizing, a huge and generous relief on the part of Nigerians that the fighting was over and that they were one nation again. The first problem was to restructure society, reintegrate the Ibos, repair the war damage and then tackle development. Gen. Gowon emerged from the war with his prestige greatly enhanced and the government set 1976 as the date for a return to civilian rule although it was far from clear just what constitutional arrangements could be made to ensure national political unity once military control at the centre had been withdrawn. There was another problem that would come to haunt Nigeria in the years that followed: the size, power and ambitions of the army. Prior to the civil war Nigeria had had an army of only 10,000 men; in 1970 it was 250,000 strong. What to do with the army and what the army intended to do on its own account became overriding preoccupations of civilian politicians and military governments alike. From 1970 onwards, as elsewhere in Africa, the army became a part of the political process. At the OAU Summit of September 1970 Haile Selassie was able to announce that reconciliation had been achieved between Nigeria and the four countries that had recognized Biafra – Côte d’Ivoire, Gabon, Tanzania and Zambia – and Gowon responded by saying, ‘Now we are all African brothers again.’ Nigeria’s economy had proved strong enough to carry the country through the war without the need to incur major debt. Nigeria was agriculturally rich, had an industrial sector that was unusually developed for an African country at that time and enjoyed huge and increasing oil revenues. At the beginning of 1970 the government set an oil production target of 1 million barrels of oil a day (b/d) for the end of the year but this had already been reached by April and in May Nigeria became one of the 10 major oil-producing countries: it produced 1.2 million b/d in August and expected to reach 2 million b/d by 1972. BP-Shell, the country’s largest producer, then accounted for 500,000 b/d. At that time Gulf, Mobil and Texaco were operating offshore. In 1970 agricultural produ
ction still earned more than did oil, though this state of affairs was not to last much longer, and development plans placed high emphasis upon agriculture as a source of revenue and employment. The principal export crops were cocoa, groundnuts, cotton, palm products and rubber. On 1 October 1970 Gowon announced the Second Four-Year Development Plan with the emphasis upon repairing war damage and making the economy more self-sufficient.
The paradox of Gen. Gowon was that while his moderation had made him an ideal war leader, the same quality served him less well in peace. His best post-war achievement was to preside skilfully over the reintegration of the Ibos for he was always good at reconciliation. But he shunned tackling two pressing problems: the increasingly unruly behaviour of the military and the growth of corruption fuelled by the new oil wealth. Over the years 1970 to 1975 Gowon enhanced Nigeria’s reputation in continental and international affairs while sidestepping awkward home problems. At the January 1971 Commonwealth Summit in Singapore Nigeria opposed the stated aim of the British to sell arms to South Africa. The government became a militant champion of the liberation movements and opposed fresh British moves to find an accommodation with the Smith regime in Rhodesia. Oil production and its revenues, however, became the dominant theme in Nigeria’s public life. Oil revenues leapt from N80 million in 1970 to N270 million in 1971 and the contribution of oil to foreign exchange earnings rose from 41 per cent in 1969 to 58 per cent in 1970 and 71 per cent in 1971. Cocoa remained the most important agricultural cash crop, followed by groundnuts and cotton. As the country’s oil-based wealth increased so did its attendant corruption but a federal decree on the problem of corruption, which had been promised, did not appear.
Increasingly, it seemed, Gowon was the prisoner of his 12 state governors and other powerful military figures whose double corruption was to stay in power and enjoy its economic benefits. Nigeria was deeply suspicious of the European Community at this time for as Britain negotiated entry to the EC, which it achieved in January 1973, the Community was offering associate status to Commonwealth African countries. Later, Nigeria would assume the lead in negotiating on their behalf but its conversion to associate status was one of necessity rather than choice. On 1 March 1972 the government announced a series of indigenization measures covering 22 different kinds of enterprise including advertising, broadcasting, road haulage and the retail trade that were to be reserved exclusively for Nigerians as from March 1974. Nigeria, now acknowledged as the leading black nation of Africa, accumulated more wealth during 1973 than at any time in its history and was making its mark as a middle-level power. Its national income had increased by more than five times from £200 million in 1965 to £1,100 million in 1973. But as Chief Obafemi Awolowo, the former leader of the Action Group, said in his capacity as Chancellor of the University of Ife in October of that year: ‘A situation such as we now have, under which the good things of life are assured to a small minority of Nigerians and almost totally denied to the vast majority of our countrymen is pregnant with unpredictable dangers for all of us, if allowed to continue for much longer.’ He added that although the country had achieved rapid economic growth, it had gained very little economic development. That year the government promised to provide free and compulsory universal primary education (UPE) by 1975. What was clearly not being resolved was the political divide – or divides – that had split the country before the civil war and, despite the reintegration of the Ibos, had not been resolved. The need for new political thinking became ever more urgent as the country began to contemplate a constitution for a civilian Third Republic scheduled for 1976. And the problem of corruption loomed larger all the time for despite repeated calls for the Federal Military Government to give a lead on the subject, nothing was done and it became increasingly clear that Gowon was not the man to take any drastic action against the huge constituency of the corrupt. The possibility of an associate economic relationship with the EC became stronger through 1973 (Britain was now a member of the EC) but Nigeria insisted that any deal had to treat African members as equals. Meanwhile, guidelines were being prepared by the Economic Development Ministry for the projected Third National Development Plan 1975–80 and these stated that a radical departure was essential if Nigeria was to be able to feed its rapidly growing population by the end of the 1980s.
Despite its generally benign reputation, the Federal Military Government (FMG) was in fact a military dictatorship although according to Mr Justice Bello, the country ‘enjoyed the most liberal military democracy in modern history’. On 1 October 1974 Gowon announced that the military would not hand power back to the civilians in 1976 as it had promised, in 1972, to do. This was, in part, a reaction to the failure to achieve a consensus about the type of constitution and civilian rule that should succeed a military handover. There were also a substantial number of leading soldiers who were in no sense ready to hand over power to the civilians. As elsewhere in Africa, the military had acquired a taste for power and were ready to persuade themselves that they could rule as well or better than the civilians. Gowon himself had become the prisoner of an increasingly corrupt military elite, including the 12 state governors whom he wanted to change but who refused to step down, and when he committed himself to creating more states he unleashed a series of political claims that he could not satisfy.
One of Gowon’s last achievements before his overthrow was the creation of the Economic Community of West African States (ECOWAS), which certainly owed a great deal to Nigerian regional diplomacy, backed by Nigerian oil wealth. ECOWAS was one more African attempt at regional economic integration but in this case it crossed the boundaries between Anglophone and Francophone countries as well as embracing the small Lusophone states of West Africa. The ECOWAS Treaty was signed in Lagos in May 1975 by 15 countries: Benin, The Gambia, Ghana, Guinea, Guinea-Bissau, Côte d’Ivoire, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo and Upper Volta (Burkina Faso), while Cape Verde became the sixteenth member in 1977. The object of the Treaty was to liberalize trade between members and work towards a full customs union over 15 years by 1990. The theory of ECOWAS made a great deal of sense, for if the fragmented economies of West Africa could come together in a working customs union this would give them greater bargaining power with their traditional economic partners in Europe. France was opposed to the formation of ECOWAS and believed, correctly, that a strengthening of regional ties would reduce its influence. In fact, it need not have worried. ECOWAS’ prospects were soon shown to be extremely limited: for three years after its launch Nigeria’s trade with its ECOWAS partners was a mere 1.6 per cent.12
The Third National Development Plan 1975–80, launched in the spring of 1975, was by far the largest African plan to that date and the size of the financial allocation – N32 billion of which N20 billion came from the public sector – was a sign of Nigeria’s new-found confidence in its future: the civil war was safely behind it and oil wealth could now be used to place the country firmly on the world economic map. After two preliminary chapters, chapter three – ‘Objectives, Priorities and Strategy’ – begins with high hope: ‘The five national objectives of Nigeria, as identified in the Third National Development Plan, are to establish Nigeria firmly as a united, strong and self-reliant nation, a great and dynamic economy, a just and egalitarian society, a land of bright and full opportunities for all citizens, and a free and democratic society.’13 Such expressions of purpose are to be found in most plans but in this case there were plenty of grounds for optimism for the wealth existed and there were many able and dynamic Nigerians to make the plan work. In the years 1970–74 the country had experienced an average growth rate of 8.2 per cent. The specific short-term objectives of the Third Plan were: increase in per capita income; more even distribution of income; reduction in the level of unemployment; increase in the supply of high level manpower; diversification of the economy; balanced development; indigenization of economic activity. Nigeria was always open to foreign investment and when he launched the Pla
n Gowon said: ‘I hardly need to add that the foreign businessmen in our midst are as welcome as ever before in the fields which have been clearly defined by law. It is the hope of government that in the promotion of their business activities they will seek to involve competent and reputable Nigerians rather than front men who claim to have influence with governments and government functionaries.’ Federal expenditure became all-important at this time. Its share of GDP, including transfers to the states, had increased from 12 per cent in 1966 to 36 per cent in 1977. ‘Public expenditure was financed initially from oil surpluses but free spending brought budget deficits which began in 1975–76 and later threatened state investment activity in the oil and steel sectors. The momentum was only maintained by external borrowing in the Eurodollar market. The limits to this form of borrowing, in the shape of two jumbo loans worth US$1,700 million, were quickly reached.’14 Despite the indigenization exercise, state intervention generally favoured large-scale foreign enterprise while, in response to the new flow of wealth, a rapidly expanding entrepreneur class, which depended upon a mixture of commerce, urban property and the exercise of managerial and administrative skills, appeared and flourished. Growing oil revenues and a strong naira increased pressures to open the economy to outside investment while at the same time encouraging a growth of central bureaucracy presiding over the competition for state expenditure.