Largely, as a result of these developments, the 1970’s witnessed a dramatic transformation of the Nigerian economy from the one dependent on agriculture to one heavily dependent on crude oil. Crude oil entered domestic production and trade from 1958. For instance, the share of agriculture in Gross Domestic Product (GDP) declined from some 40 percent in the early 1970s to about 20 percent in 1980. By the latter year, oil accounted for some 22 percent of Gross Domestic Product, 96 percent of export earnings, and 81 percent of government revenue.

The “oil boom” of the 1970’s brought about profound changes in the Nigerian economy. Efforts were made by the authorities during this period to use the relatively massive revenues in restructuring the economy, and some progress was actually made in the areas of social and economic infrastructure. In this connection, the efforts undertaken under the Third and Fourth Plan Program may be noted. However, widespread distortions, imbalances and anomalies in the economy emerged during this period.

The increased intervention of government in the economy, which was fostered by the boom in revenues, resulted in a proliferation of parastatals and some pubic investments which were of doubtful design, viability, and in retrospect, beyond the executive capacity of the relevant government agencies. There was also a proliferation of “manufacturing” activities which were heavily dependent on imported inputs until very low local value added – e.g. vehicle assembly plants. This was also the era of subsidized exchange rates. In reality, these activities were speciously based, with high cost structure as confirmed by studies undertaken by the Central Planning Office in 1973.

Although not often appreciated, the increased role of government also encouraged the expectation of the policy that the state can and should enlarge its powers and role – thus helping to legitimize the ever-expanding government absolutism inherited from colonial times.

The heavy dependence of the country on oil and imported rendered the economy highly vulnerable to external shocks. Consequently, with the secular collapse of the world oil market which started in mid 1981, an economic crisis emerged in Nigeria, although its magnitude and duration could not be recognized at the time.In terms of overall management of the economy, plans and stabilization, the approach is also insightful.

The first stabilization effort in modern Nigerian economic history targeted on commodity prices – the received prices of our agricultural exports –  was conducted by the colonial power and economics of that industrial centre almost five decades ago, with the subsequent introduction of the Produce Marketing Boards. It is true, of course, that this efforts at commodity price stabilization did have much salutary economy-wide effects, including financing of higher education and railway extension, but its objective remained, even during later revisions of its underlying theory and practice by the economists of the imperial centre and, by our public officials.

The second effort, this time targeted on the center economy, was represented in the Second National Development Plan, a “reconstruction” plan; for its objective was, in essence, to enable the economy to resume, from the ashes of the civil war, its desirable progressive course which had been demonstrated at some points in the pre-war period. It shared with its successors, the Third, Revised Third and Fourth Plans, an unfortunate embedding in an admissible policy framework.

It is instructive to note elements of “discontinuity” and unsustainability deriving from the plans. While the First and Second National Development Plans envisaged capital expenditure program of N2.2 billion and N3.2 billion, respectively, the original Third Plan’s size was some N30 billion (i.e. ten times that of the Second Plan); its revised version was 16.6 times as much as the Second Plan, while the Fourth Plan’s size was N82 billion, almost twice that of the Revised Third Plan. Fuelling these expenditure proposals were the boom in oil prices following the 1973 Yom Kippur war (a virtual quadrupling and its aftermath) and simplistic projections based on the observed trend. But as public expenditure exploded so did private expenditure, and both, because of a high domestic propensity to import and weak policy controls, impacted heavily on the foreign trade sector with severe balance of payments problems.

Not surprisingly, in the adherence of suitable stabilizers, these plans were derailed by shock and reverse short of oil price volatility, which superimposed their deleterious effects on those of the political-administration instabilities – the latter not being really independent events. Structurally, allured by the then unprecedented inflows into the treasury, Nigeria headed off in the wrong direction – spending sprees, exchange controls, charity economics, etc.