African Government, Government of Nigeria, Economy of Africa

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NIGERIA - THE COLONIAL ECONOMY, 1860-1960
Posted to the web: 3/5/2003 10:17:41 AM
 
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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 of forces.

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, 332).

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, 1983:43).

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 export earnings.

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) components.

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 Research).

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.

 

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