Two related aspects of the colonial economy have been particularly important
in shaping Nigeria's development path. They are the development orientation
and the resultant structure and character of production.
Development Orientation of the Colonial Authorities: The colonial authorities
approach to the 'management' of the Nigerian economy was characterised by two
main orientations. The first was informed by the major factor which initially
informed British presence in the territory that eventually became Nigeria and
eventually British colonial rule the search for cheap supplies of resources,
human and material, to contribute to the sustenance of the British Empire.
It was the need to ensure that the exploitation of Nigeria's resources for
the benefit of the empire was undertaken in a more efficient manner that led
to colonial rule. Thus during the early decades of colonial rule, the colonial
authorities in Nigeria were concerned with the provision of basic infrastructure
and services in the country to the extent that they were required to enhance
the sourcing and shipment of raw materials to Britain.
The second orientation is what Schatz (1977) describes as "colonialist
nurture capitalism with a welfare tendency." This is an approach by which
the government sought to directly influence, in some ways, the course of events
in the country. This change in orientation was brought about by a combination
The colonial government's idea of development and how to pursue it were summarised
in two documents which the adminis- tration described as 'development plans.'
These were the socalled Ten Year Plan of Development and Welfare for Nigeria
1946-1956, which was terminated in 1954, and The 1955-1960 Plan.
For the first ten year period (1946-1956), the colonial administration planned
to allocate national resources mainly to activities that would bring about improvements
in the general health and mental condition of the people, and to the provision
of those physical facilities which may be regarded as the minimum necessary
for the general improvement of the country and its population (Helleiner: 1966,
In terms of specific sectors, this policy meant concentrating public resources
on the provision of social services, as well as transport and communications.
The belief, then, was that these facilities would induce private entrepreneurs
to invest in industry and agriculture that would bring about the jobs, the goods
and services, and the modern skills and production techniques (i.e. technological
capability) necessary for the growth of the economy and the improvement of people's
material well being.
Thus, the private sector was entrusted with the task of establishing and running
directly productive activities (DPAs), while the government concentrated on
the provision of physical and social infrastructure. The 1955-60 Plan showed
a slight modification of the colonial government's approach to development.
The authorities began to participate in directly productive activities by setting
up and running industrial and agricultural enterprises.
The modification was brought about by the realisation that indigenous business
had not yet developed the necessary productive capacity. It was in response
to the prompting of eager indigenes in government, who then constituted a significant
force in policy making, following the 1954 constitutional changes.
Structure and Character of Production: Because the dominant motives
of colonialism were the search for cheap raw materials and expansion of markets
for the products of the colonialists, the colonial economy was dominated by
agriculture and trade. The authorities, through a combination of devices, stimulated
the production of such industrial raw materials as palm oil and kernels, cocoa,
cotton, groundnut and rubber.
The result was that export trade in these commodities soon became the dominant
feature of the colonial economy. It indicates the extent of export of two of
the most important agricultural products, namely palm oil and kernels, between
1865 and 1889. These show that, overall, there were fluctuations in the quantities
of both products exported from year to year. Yet, during 1885-9 substantial
increases were recorded.
Increased export demand also stimulated activities in the production of the
other major agricultural products cocoa, groundnut, cotton and rubber. In the
case of cocoa, for instance, it is reported that within two decades of the introduction
of the crop into the country, export production had reached about 202 tons (Onimode,
This part summarises information on the foreign exchange earnings generated
for the country by the trade in the major agricultural products. It can be observed
that earnings increased substantially from 1950, as Nigeria was approaching
independence. The promotion of major agricultural goods for export (cash crops),
generated substantial foreign exchange for the government, but it created problems
in some other aspects of the economy.
In particular, it left the production of food crops in the hands of peasant
households who generally worked on small plots of land, with low inefficient
technologies. Thus, the emphasis on cash crops production created the conditions
for the food insecurity which the country later experienced. With the growth
of foreign trade came the need of modern financial institutions, especially
banks, mainly from Britain.
Among the early banks were the British Bank of West Africa (now First Bank
of Nigeria Pie), and Barclays Bank (now Union Bank of Nigeria Pie). These banks
brought with them British payment instruments, especially silver coins, and
the modern practice of banking. Soon, several new banks emerged. But because
most of the new banks were ill equipped, they soon failed (Nwankwo, 1980).
This experience, and several other factors, led to the establishment of the
Central Bank of Nigeria in 1958 to, among other things, regulate developments
in the financial sector. Another significant economic activity during the colonial
period was mining of such minerals as coal, tin, columbite, petroleum and gold.
The colonial authorities controlled the mining of gold, but left the mining
of the other minerals to private foreign companies.
It gives information about the contributions of the minerals to the country's
foreign exchange earnings between 1900 and 1960. As in the case of agricultural
produce, earnings from mineral exports also increased substantially from 1950,
particularly in the case of tin and columbite. While revenue from gold had started
declining by 1945, petroleum had, by 1958, started contributing to Nigeria's
The colonial authorities built some basic infrastructural facilities in Nigeria.
But, in this sector also, the motive of promoting the economic interest of the
authorities was clear. This motive dictated the nature and patterns of the facilities,
for instance, the roads. These, as the other facilities, were designed mainly
to facilitate the evacuation of agricultural and mineral products.
The economic interest of the colonialists also led them to avoid the promotion
of industrial activities, particularly manufacturing, in order to protect the
market for the products from their home country. But these, and the several
other features of the colonial economy, were explained in terms of the laissez
faire philosophy of the time.
Development Programmes: For the first ten years (1946-1956), the colonial
government planned to make a total capital expenditure of £55 million.
A substantial proportion of this was allocated to social services and transport
and communication in accordance with the development orientation of the authorities.
For instance, the improvement of water supply and health services was allocated
as much as 25 percent whereas industry and agriculture, the directly productive
sectors, were allocated only 6.4 percent of the budget. During the 1955-1960
period, the total planned capital investment, £330 mitlion.was much larger
than that of the previous period, but the allocation for industrial and agricultural
development, although higher than before, was still small, being only 9.0 percent.
The transport sector alone was to take 38.7 percent (Olaloku, et.al,. 1979:139)
As part of the effort to change the structure of the economy, the governments
(both Federal and Regional) decided to specifically encourage and induce foreign
investments in the country, especially for industrial production. These mounted
a campaign in Europe by which they sought to make known to European industrialists,
in particular, the opportunities that were available for investment in Nigeria,
and announced a number of generous incentives to attract them.
They included the Aid to Pioneer Industries (1952) and the Industrial Development
(Income Tax Relief) Ordinance (1958). Other incentives included guarantees on
the security of foreign investments and freedom to repatriate their capital
at any time they wanted to do so.
Thus, to achieve development in Nigeria, the colonial administration nurtured
private entrepreneurs and relied on them to take the necessary decisions, such
as: the choice of projects in which to invest and, therefore, the types of goods
to be produced in the economy; the materials to use in producing the goods and
the sources from which to procure them; the techniques to employ in production
and their sources; the locations of such activities in the local economy; and
who to collaborate with on the projects and the terms of such collaboration.
Because these are the crucial decisions in the development process, the colonial
administration's approach amounted to leaving the task of developing the economy
and society to private business men and women.
Encouragement to the Indigenous Sector: Long before, and during, the
colonial period, Nigerians operated considerable market-oriented economies.
These were especially in respect of agriculture, including hording and fishing;
mining and industries (smelting iron works, bronze works, etc.) and crafts,
using leather, wood, raffia, clay and the like.
Various articles of trade thereby went into the various networks and rings
of daily and periodic markets, as well as short and long distance ones. Apart
from several such local market rings, there were interregional trading centres
and linkages, in different directions, East West and North South, in the territory
now known as Nigeria. There were also international and inter continental markets,
trading routes and commercial transactions involving Nigerians.
Thus, there were trans Saharan, to countries of north Africa and southern
Europe; trans Atlantic, to countries of south and Latin America; and, transnational,
to countries surrounding Nigeria (including Cameroun, Niger, Togo and Chad).
The economies of the Nigerian people during both the pre colonial and colonial
periods were able to sustain these trading links, as well as substantial population
increases, settlement spread into frontier areas or regions, and urbanisation
at the time.
Products and art pieces dating even far beyond the colonial period are well
known today in the world of art. During the colonial period, the authorities
also tried to encourage this indigenous economic sector, consciously and unconsciously.
They recognised and encouraged a dual economy with internal and external (export)
Unconsciously, the relative peace and security which colonial rule eventually
ushered in meant, for instance, that the areas (spheres) for the people's economic
activities were widened, as they could have access to farmland, fishing grounds
or pasture land even beyond their ethnic or kindred areas.
The roads and rail ways constructed in the export crop producing areas or
to the mineral mining zones also helped in evacuating agricultural surpluses,
including the local food crops, to distant markets and consuming populations
particularly in the cities and denselye duction of such local food items as
root crops and cereals, or animals as beef, chicken and fish, increased both
in quantities and land areas concerned.
Through the initiative of the colonial authorities and individual (including
expatriate) philanthropists, some innovations were introduced into the local
economy. They included nylon fishing nets, new crops (cassava, and maize) and
new breeds of cattle (zebu).
They provided water from earth dams and reservoirs for, and encouraged, irrigation
farming in many parts of Northern Nigeria. Some of the industrial and commercial
businesses owned by the government or operated during the colonial era helped
to organise the local farmers and or to provide them it with funds (capital)
for their farming inputs or activities.
Examples include cotton farmers (helped by the then British Cotton Ginneries
Association), and tobacco growers (by the Nigerian Tobacco Coy.) Perhaps the
most significant conscious encouragement from the colonial administration was
in research and scientific back-up. Many research institutes in Nigeria today
started at that time.
They include lbadan (Moor Plantation); Benin (Nigerian Institute for Oil Palm
Research); Urnudike, near Umuahia (National Root Crops Research Institute);
Badegi near Bida (National Cereals [then Rice] Research Station); Vom near Jos
(National Veterinary Research Institute); and, Kaduna (Institute for Trypanosomiasis
There were, indeed, several others Based on the findings and pilot trials by
the research institutes, agricultural extension services were offered to the
farmers through government paid extension workers. With these and several other
measures, the colonial era witnessed some boost in the internal economy and
well being of the local people, as well.
Performance of the Colonial Economy: Opinions differ concerning the
performance of the colonial economy. However, it has to be admitted that the
economic policies and measures adopted at the time have affected the nature
and character of the development problems Nigeria faces today.
Nurture capitalism has continued, even though it has been largely unsuccessful.
Also, the country's industrialisation efforts and, indeed, the entire development
process, have become dependent on external factors as a result of the initial
policy measures. These features of the Nigerian economy will have to be changed
in the struggle to improve living conditions in the society.