Tweet

The Nigerian Context - A Story of Decline: Exploring entrepreneurship in a declining economy

Guest post by: Journal of Development Entrepreneurship

Article Overview: Nigeria is usually referred to as the giant of West Africa in that, with a population estimated at over 100 million, one in every two West Africans is a Nigerian. The country's GDP is larger than that of all the other countries in West Africa combined. Its GDP is actually larger than that of all countries in the African continent with the exception of South Africa. (Adaya, 1998).

The Nigerian Context - A Story of Decline: Exploring entrepreneurship in a declining economy

Nigeria is usually referred to as the giant of West Africa in that, with a population estimated at over 100 million, one in every two West Africans is a Nigerian. The country's GDP is larger than that of all the other countries in West Africa combined. Its GDP is actually larger than that of all countries in the African continent with the exception of South Africa. (Adaya, 1998).

As the result of oil exports during the 1970s, Nigeria emerged from being a poor agricultural country into a relatively wealthy country. In the oil boom period of 1973-80, Nigeria enjoyed a phenomenal economic growth, with per capita GDP rising from $220 in 1971 to $1,100 in 1980. In this period, despite the dramatic rise in oil revenues, misdirected government policies left the country's economy vulnerable. Public investment was often focused on costly prestigious and inappropriate infrastructure projects with questionable rates of return. The government also failed to strengthen public finance and pursued expansionary financial policies which created significant inflationary pressures. Inward looking industrial policies also bred a noncompetitive manufacturing sector. The agricultural sector was completely neglected as the real effective exchange rate increased due to rising oil prices. The competitiveness of virtually all non-oil sectors of the economy was eroded.

During the early 1980s, the collapse of world oil prices, together with the rise in real interest rates in the international capital markets, seriously weakened Nigeria's precarious international and domestic fiscal situation. This trend was reflected in the country's declining international reserves and collapsing revenue base. Since then, the government's economic policies can been characterized in terms of inept public investments, inconsistent macroeconomic policies, dangerous and corrupt management of the country's rich and diverse natural resources, and overt hindrance of comprehensive structural adjustment. These factors combined to debase the country's currency from NO.75 to the US$ in the late 70s to N96.00 to the US$ in 1999. Such devaluation has produced high inflation, high unemployment and the spread of poverty. Nigeria's per capita GDP declined to $340 from $1,100 in the early 1980s. By the early 1990s the country had declined from a middle income level to one of the poorest in the world (World Development Report, 1994). The country provides a vivid illustration of all the problems of economic decline and cultural vacillation.

At the same time, entrepreneurship and business development are not new phenomena in Nigeria. The Ibo ethnic group, for instance, is recognized internationally for its culture of entrepreneurship (Dana, 1995). And since the middle 1980s, the country has experienced exponential growth in the number of private firms. However, a majority of these firms were very small in terms of capital, employment and revenues.

Exploring entrepreneurship in a declining economy
Journal of Developmental Entrepreneurship, Apr 2000 by Yusuf, Attahir, Schindehutte, Minet

Related Articles
  Exploring entrepreneurship in a declining economy
  Government Support for Entrepreneurship in Nigeria : Exploring entrepreneurship in a declining economy
  Nigerian Government Creates $426m Microcredit Development Fund
  Methodology : Exploring entrepreneurship in a declining economy
  17.0 What Needs to be Done - Mainstreaming Entrepreneurship: Entrepreneurs and entrepreneurship in Africa

Article Tags: adaya, african continent, agricultural country, boom period, effective exchange rate, fiscal situation, industrial policies, infrastructure projects, international capital markets, international reserves, oil boom, oil sectors, per capita gdp, phenomenal economic growth, public investments, rising oil prices, sectors of the economy, wealthy country, west africans, world oil prices



Related Forum Posts
Re: Businesswomen in the news - Hey hey hey....Calm down. What you are forgetting and the press isnt taking into consideration the rise of entrepreneurship. Women arent leaving the workforce, they are starting their own workforces... A few years ago I was president of the Canadian Association of Women Executives. I got a call from Global National who wanted a comment on the fact that women were leaving corporate Canada in droves....and what did I think about it......was it the glass ceiling etc.. Well, its because women are flocking to entrepreneurship but ladies, that doesnt make the news. the media is looking for information that will prove their 'the economy is in a slump'.... It simply isnt true. There are more women starting and running their own businesses than we've ever seen. Dont forget that the media is out for the media and scare tactics and bad news gets the coverage.... J
Re: With Love From Nigeria! - Hi Adebola Oni, Welcome to this great forum. I just saw your post today. You will like it here. I am also a Nigerian living in South Africa. I will check your sites and get back to you
Re: Service Or Product? - Service company always thrive in down economy. Let look at the advertising industies in any economy, you need to advertise your products or services even if you cannot afford any other things
Re: Corporate / Business Credit - It's funny you bring this topic up. I have a friend that works for a large Canadian bank and he is a financial analyst and advisor for several businesses. With the recent economic crunch, many of his clients are coming in and seeking lines of credit and loans to suffice their operating costs. He forecasts a lot of his clients will be asking for credit until the economy turns around. Many of the loan managers are declining applications because the business owners applying for these credits are actually stating in their application that they need it because they have been unable to deal with the recent crunch. Unfortunately, they at the bank do not look at this favorably. If they lend money, they want to know it will come back. If you report net losses for the last 6 months and expect them to lend money to you, it's going to be terribly difficult. I think that is why you are seeing a lot of businesses apply for credit, but not actually receive any assistance from the banks. The banks are also in crunch time and need to be mitigating their own risk as best they can.
Re: Plan Your Retirement NOW - Hi, Beat I must say the state of the economy has me worried these days. Not so much the state of it...but the knowledge that the politicians and people who are supposed to be in charge of the economy are so incompetent it's not even funny...


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How to Set Sales Goals that Work

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.