CHAPTER ONE

INTRODUCTION

1.1Background of the Study

Since after the discovery and commercial exploration of oil in Nigeria in 1958, the Nigeria economy has drastically change. But oil was not the only sources of her economic development.  However, the non oil sector will not be under estimate. The non-oil include such sub-sectors like the Agricultural sector, service sectors, building and construction, wholesale and retail trade, utilities, and other sub-sectors and manufacturing activities that are not related to oil.

       Prior to the commercial mining of oil in Nigeria the Nigeria economy had been characterized with, and importantly also, had depended on agricultural produce for the provision of food and raw-materials for the cottage and small industries that then existed.  In the early 1950’s and 1960s, agriculture played a crucial role to the nation’s economy. Abayomi (1997) did not that in these golden agricultural years, contributions from the sector accounted for 70 per cent of the Gross Domestic Product (GDP).  This was a period when the economy was not only self-sufficient in the production of food crops to feed the nation, but also provided raw materials fro industries and major cash crops for exports in the 1970s, as we have said earlier, the Nigeria economy became heavily dependent on the oil sector, as the revenue from this sector overshadowed that from the agricultural sector.  This was the beginning of our economic problems (Udabah 1999:75).  Despite constituting 90 percent of the total foreign exchange earnings. Since 1970 till date, such contributions which was as a result of the increased international demand and subsequent improvement in the market price that preceded the oil-boom era. The adversity of the fluctuations in oil prices has, in no small measure, stalled the developmental efforts of the various governments, and made the Nigeria economy to plummet from the oil-boom era; as exemplified by the buoyant economy of the time, which massive infrastructural development, to the oil-doom era, which arose from the glut in the world market, since 1981only led to the neglect of the non-oil export productive base.  Consequent upon the collapse in the world oil market, Nigeria started experiencing economic crises.  “The fall in oil prices and exports reduced the government revenue to service all sectors of the economy…. It was against this background that the government introduced an economic programme embodied in Structural Adjustment Programme (SAP) which is still being pursued in the form of guided deregulation.” (Udabah 1999;76). It was unfortunate to observe that the phenomenal improvements in the contribution of the oil sector only but marked the beginning of the dismal performance of the non-oil sector.  Hence, according to Udeabah (1999:79), while the non-oil sector grew at an average annual rate of about 15 percent between 1970-1974 in the pre-SAP era, the oil sector grew by a straggering rate of 117 percent.

       The continued unimpressive performance of the non-oil sector, the volatility of the world oil price, and the vulnerability of the external sector thus dictate the urgent need for a conscious reappraisal of the thrusts and contents of the development policies and commitments to the implementation.  Udabah (1999;77) did stated that in view of the volatile nature of the country oil export earnings, it would appear that the only way out is to curtail the rate of growth of imports and boost the rate exports. 

       Indeed, the need for a change in the policy focus and a shift in the industrialization strategy is imperative if Nigeria is to be returned to the path of sustainable growth and external viability.  We must go back to our roots and plan more astutely if we are to concretize the concept of the vision 20, 2020, as was pioneered by the immediate past President, Late Alhaji Umaru Musa Yar’adua.