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
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