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RESTRICTED GENERAL AGREEMENT ON COM. 1-JulyTD/G/W/1 TARIFFS AND TRADE Limited1965Distribution Expert Group on Trade Flows and Aid Studies DEVELOPMENT PLAN STUDY NIGERIA TABLE OF CONTENTS Page PURPOSE AND OUTLINEt PART I: THE DEVELOPMENT PLAN The Development Plan 4 Recent Finani±al Developments 12 Industrial Planiîng 15 Export Marketing and Taxation 17 PART Il. NIGERIA' S FUTURE EXPORTS Present Situailon 18 The Export Forecast 20 Commodity Prospects 28 Tariff Issues 31 Export Organization 37 CONCLUSIONS 388- APPENDIX I - NIGERIA: GENERAL DESCRIPTION Geography and Climate 40 Agri culture 41 Mining and Mineral Resources 45 Industry 47 Transport 49 Post-War Development of the Economy 51 Additional Statistical Tables 60(a) APPENDIX Il - COMMODITY NOES Groundnuts 61 Palm Produce 85 Cocoa 103 Forest Products 11.9 Rubber 139 Cotton 152 Tin 161 Benniseed, Cottonseed, Soyabeans 169 Hides and Skins 175 COM.TD/G/W/1 Page 2/3 THE NATIONAL DEVELOPMENT PLAN AND FUTURE EXPORT CAPACITIES OF THE FEDERATION OF NIGERIA Purpose and outline 1. The country studies of the GATT secretariat are concerned, broadly speaking, with the foreign-exchange implications of national development plans. In the present case, the availabilities of time and manpower did not allow all of these implications to be studied in equal detail; nor did it appear necessary to do so. Future import requirements of Nigeria, for example, had already been analyzed by several independent research teams. As regards imports, therefore, this report assumes what the conclusions of previous research, as well as actual developments in the first two years of the Plan period, suggest, namely, that it should not be too difficult for the economic authorities of Nigeria to control the rate of imports at the levels foreseen by the Plan. 2. On this assumption, the analysis presented here could concentrate on two other aspects of the relationship between internal and external development. The first part of the report, discussing the methods, assumptions and the main targets of the National Development Plan 1962-68, attempts to elucidate, in particular, the financial dependence of the Plan's investment programmes on (a) external funds, i.e. foreign direct investment and foreign aid, and (b) on internal funds to be derived, ir, one way or another, from export activities.- The.second part is concerned with the development of Nigeria's export capacity under the Development Plan, and summarizes its findings in a forecast of Nigeria's commodity exports in 1968, the terminal year of the Plan period. 3. The second task involved. a Judgement between what would seem to be the feasible as against the most likely development. In a number of cases, Nigeria's export potential, as it appears in 1965, considerably exceeds the evaluations made in 1961 when the present Plan was being drawn up. While the report advances some recommendations as to how this potential might best be realized, the forecast of 1968 exports does not depend on the acceptance of these recommendations and may be, in that sense, considered a minimum estimate. 4. Appendix I gives the background information on the economy of Nigeria, pertaining to both its present structure and recent development, which may be required for the evaluation of the main conclusions of the report. 5.. Appendix Il consists of a seriès of detailed export commodity studies, covering commodities which account at present for about83 per cent of Nigeria's export earnings, and including the analysis of both the external markets to which Nigeria sells and the internal factors bearing on the production of each export commodity. The discussion of production capacities attempts to evaluate the Plan targets, whore explicitly formulated, by the information collected by the GATT mission in Nigeria in February and carly March 1965. Each commodity study leads to an export estimate for 1968. These results have been collated in the aggregate export forecast presented in the body of the report. COM.TD/G/W/1 Page 4 PART I THE DEVELOPMENT PLAN 6. In April 1962, the Nigerian Governments launched their first national Six-Year Development Plan. While there have been other plans in the past, this is the first Plan to integrate the development programmes of the Federal and Regional Governments into a comprehensive whole. It consists of three Regional Development Plans complemented by a Federal Plan; but each of the Regional Plans already reflects both an awareness of the existing regional complementarity, and some effort to benefit from it and to develop it further. Unfortunately, not all industrial ambitions of the Regions were amenable to compromise; each Region, for example, stakes out in its Plan a claim to an iron and steel complex. 7. The strategy guiding the Plan aims at achieving an "open", export-orientated development, with a minimum of foreign trade and exchange controls. Exports are to be, as they have been historically, the leading sector whose progress stimulates investment and growth in other parts of the economy. The emphasis on the development of experts implies a high degree of reliance on private initiative for which the Governments intend to provide incentives and assistance rather than direct regulation. To stimulate industrialization, the Governments are prepared to provide substantial amounts of capital on a loan or participation basis. 8. The priorities of the national investment programmes have been arranged accordingly. Agriculture and manufacturing are in the focus of attention, and the directly productive sectors, including power and transport, will absorb between 60 and 70 per cent of total (public and private) planned investment. High priority is also assigned to education, particularly secondary education, and to vocational, managerial and commercial training. Import substitution, although implied by the industrialization programme, is not stressed as an explicit goal of economic policy. 9. According to its method, the Plan can be characterized as a roughly co- ordinated series of public investment and policy programmes which, together with the expected amount of private investment, are required to support the postulated minimum rate of growth. Though internally consistent, it is thus not a wholly interdependent, and binding, blueprint for policy but a looser kind of statement, indicating the main directions of development and open to change and improvisation. Given the approximative nature of the national income data, this was the only possible approach to planning. It is noteworthy, for example, that the Plan is set out essentially in terms of annual growth rates to be attained by the main categories of gross national expenditure. It contains very few references to absolute magnitudes or structural relationships, present or expected, and no complete set of specific production targets. By extrapolating the national income estimates which were available to the planners at the target rates specified or implied by the Plan, it is possible to describe, in very rough relative figures, what the Plan proposes to achieve. ¹In the years since the publication of the Plan, the political pressures for greater regional self-sufficiency seem to have increased and with them the danger of unnecessary duplication of manufacturing investment. COM.TD/G/W/3 Page 5 Table 1.1 NIGERIA: PLAN TARGETS Approximative Annual Composition of GNP Growth Rate 1961 1968 Private consumption 3.0 83 78 Public consumption 11.6 8 12 Gross investment 4.0 15 15 Exports 5.9 15 18 Impbts .J.65.6 -21 - 3 21 Grô s national. pro0uct 4.( 100 100 Including debt service and profit remittances. 10. mportsa To maintain the minimum target rate of growth, the toial of gross fLxed investment required over the Plan period was e1timated at £Nl,183 million in 1960-61 prices. The Plan presents two tentative breakdowns of this sum, calculated on pessimistic (Version A) and optimistic (Version B) assumptions as regards private investment. Table 1.2 PIANNED COMPOSITION OF INVESTMENT, 1962-1968 (million 9N) (A) SB) 1. Buigetcd capital expendit ae of Federal -nd Regional Governments 5Ol 504 add: Local governments' investment 29 29 less: Investmonts for defence -28 -28 add: Capital. formation from current expenditure 149 132 less: Adjustment for underspending -33 Sub-Total I: Govlrnment capitaJ expenditure 621 578 2. Budgeted capital expenditure of statutory corporations Sub-Total Il: Public capital expenditure 794 751 3. Private capital expenditure TOTAL: ROSS FIXED INVESTMENT 1,18) 1,183 COM.TD/G/W/1 Page 6 11. Private gross fixed investment in 1960-61, according to the Plan document amounted to approximately £N72 million. It will be readily sean that the more optimistic version of the calculations presented above expects private investment to maintain during the lifetime of the Plan the annual level it had reached in the base period, while the pessimistic version expects it to decline to an average annual level of £N65 million. It seems obvious that the planners' efforts were concentrated at determining the maximum possible levels of public investment and that the estimate of private investment was obtained more or less as a residual from the required minimum total. Table1.3 SECTORAL BREAKDOWN OF PLANNED PUBLIC INVESTMENT² (thousand £N) Northern Eastern Western Sector Federal Region Region Region Total 1. Primary production. 20,466 22,494 30,361 18,439 91,760 2. Trade and industry 44,030 9,864 12,930 23,445 90,269 5. Electricity 98,140 1,500 600 1,500 101,740 4. Transport 103,957 24,660 8,850 6,350 143,817 5. Water other than irrigation 1,863 7,442 5,100 9,853 24,258 6. Commmunications 30,000 - - - 30,000 7. Education 29,154 18,949 8,805 12,855 69,763 8. Health 10,304 3,317 1,819 1,636 17,076 9. Town and country planning 23,160 6,000 3,306 9,280 41,746 10.