Before independence in 1960, the economy was characterised by the dominance of exports and commercial activities. There was no viable industrial sector. After independence, agriculture contin ued as the mainstay of the economy. In spite of fluctuations in world prices, agriculture contributed about 65 per cent to QDP and represented almost 70 per cent of total exports. Agriculture provided the foreign exchange that was utilised in importing raw materials and capital goods. The peasant farmers produced enough to feed the entire population. The various Marketing Boards generated much revenue, the surplus of which was used by government to develop the basic infrastructure needed for long term development. The main thrust of policy was to maximise the benefits of the export-led development strategy.
Raw materials, comprising agricultural produce and minerals were exported to the industrialised nations. The industrial sector continued on the pioneer industries schemes of the 1950s. Import Substitution Industrialisation (ISI) strategy was adopted. Consequently, various consumer items, which were hitherto imported, were produced domestically. Protective measures like tariffs, quotas, etc. were in place to ensure that domestic industries were allowed to grow.
In the short run, jobs were created, although the industries were to some extent unnecessarily protected by government. Generally, the finished products of the pro tected industries were less competitive compared with their foreign counterparts. Of course, that did not decrease domestic demand for them. However, Nigerian industrialists did not take advantage of the various protective measures put in place by government by investing to enhance its competitive ness. During this period, the rates of inflation, unemployment and productivity remained relatively acceptable. Policy favoured tight demand management. Increased productivity kept prices rea sonably stable within the economy. The unemployment rate was around 1.5 per cent and was most visible among primary and secondary school leavers.
The 1962-1968 First National Development Plan ensured that the State participated in economic activities, directly and indirectly. The Plan argued that government must provide the necessary infrastructure. Furthermore, due to the vicious circle of poverty, government provided investable funds in order to accelerate the rate of economic develop ment. Private savings were still very low, hence, the low rate of private investment.
The gap between the rich and the poor, though not quite visible, began to emerge. A class of traders, commission agents and contractors started to appear. The manufacturing, trading and services sub-sectors were still controlled by non-Nigerians. Most of the big companies were branches of multi nationals with no sign of Nigerianisation until the mid-1960s when some Nigerians began to occupy senior positions in a few multinational companies.
Before the oil-boom, the economy was characterised by the predominance of subsistence and commercial activities; narrow disarticulated produc tion base, with ill-adapted technology; neglected informal sector; lopsided development due to the bias of public policies; openness and excessive dependence on external factor inputs; continuous siphoning of surpluses from the economy; and weak institutional capabilities. The various policies of the pro-oil boom era "failed" to address these identified features of the economy.