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Nigeria's position in North/South dialogue. Explains political and JJJj econer.lc rationale and projects .likely
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in the North-South Dialogue
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Economic Development Branch Developing Nationsace of Economic Research
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Delineates Nigeria's position* South dialogue. Explains political and econoT.lc rationale and projects likelyuture patterns.
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Should you have questions on the narrower North-of this oiace^Please feel free to contact
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political or economic issues can also be channeled to us, but we will have to defer to other comoonents in any final judgment.
conomic Development Branch Developing Nations Division Office of Economic Research
As stated
Distribution:
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Nigeria in tho North-South. Dialogue
For Nigeria, North-South meetings are only one of several scenes in which to playelf-appointed role as Black Africa's premier power and oconomic This mission, prospects for which wereonhanced by oil gains and rapid growth, is bused primarily on the overwhelming size of its economy (compared to others in the region) and the sense of national destiny that emerged from strong historic traditions and the crucibleainful civil war. More comfortable with Western economic and social customs than many of its neighbors,.Nigeria canbe stirred to stern positions over the question of excising white supremacy in southern Africa.
Nigerian leaders have generally seen the North-South dialogue as the basis for providing their bona fides for leadership of the African states in other settings. Although they do not stand to gain very much from the specific proposals of7 on key issues, they lend relatively uncritical support to the overall programew International Economic Order he North-South meetings themselves do not engage their
Tho mix of Nigerian attitudes toward the developed world io ft continuation of policies implemented immediately following independence. In, the civilian government'a international relations were characterized by nonalignraant tempered by concern for established economic ties. Even in this period, than, the reliance on Wastorn aid and the preponderance of trade with the
West were the flesh on the bones of foreign policy. Certain policy deciaiona taken at theowever, such as breaking of diplomatic relationa with France over nuclear teating in the Sahara and diplomatic recognition of the USSR, attested to Nigeria's political independence. Under the succeeding military governmento, there has been, if anything, laaa lip service to the notion of evenhandad dealing with East and west. Nevertheless, crucial differences over the speed with which progress has bean achieved for black majority rule in southern Africaasic distrust of Western motives in dealing with Third World countries have kept the Nigerians skeptical and aloof toward the developed countries. stances on Key Issues
With the bulk of LDCs, Nigeria has moderated its stance from confrontation to negotiation within the framework of the North/South dlalocjue. However, it isery strong advocate of changes in thoeconomic order to benefit the LDCfl. In most
instances, its delegations7 positions without
significant modification on interpretation.
Nigeria unequivocally supports7 conceptommon Fund. It views the "liecond window" as the most important facet of the fund and would favor using this mechanism to finance resource urar.sfers to the LDCsincluding tho underwriting of export diversification, the processing of raw materials, and tho strengthening of research and development capabilities. Lagos believes that direct governmentshould be the major source of funds. It alsoreater role for the LDCs in managing the Fund than would emerge from their respective shares of
0 Nigeria supports immediate dsbt relief for the LLDCs, the landlocked countries, and these classified aa most seriously affected (MSAs} despite its own small accumulated debt. While concerned to maintain its good credit rating in the commercial markets, the government views debt relief for the poorer
African countries os an important moans to increase aid flows.
Nigeria supports the concept of commodity agraemontsay of protecting the purchasing power of developing countries' earnings from commodity exports, it exports four of theommodities currently included in the ukctad's Integrated Program for Commoditiesocoa, palm oil, rubber, and tin. Among these, only cocoa is aexport earner at present.
Nigeria actively supports increased foreign aid for itself and other developing countries, both bilaterally and multilattrally. It is especially adamant that developed countries achieveercent of GNP guideline
. Interestingly, the Nigerians have been criticized by some African LDCs for not being more forthcoming with their own economic aid.
8 Nigeria is currently goingeriod of re-evaluation of its attitude toward foreign investment but probably will not rake profound changes in current laws. It does? proposals to strengthen
a country's bargaining" positionis foreign firms and attempts to usepolicylub on Western commercial ties to Rhodesia and South Africa. Tho Lagos governmenttrong critic of what it terms exploitation of developing countries by the multinationals, requiring that foreigners participateartnership baiiis. oint venture law requiringercent Nigerian ownership is enforced selectively.
0 Nigeria actively soaka increased and leas
costly technology transfer to the Third World but prefers to secure its own technical assistanceilateral basis rather than through some internationally-supervised technology clearinghouse. Priority fields for the acquisition of technology from abroad include petroleum and food processing, distribution facilities and the development of heavy industry.
Nigeriaeading moderate among LDCs in the Law of the. Sea negotiations. It io principally interested in securingrightsroposed exclusive
6 .
economic zone. Subject to bilateral agreement, Nigeria would guaranteoand geographically disadvantaged states access to the sea and living resources of the coastal zones of neighboring states. Nigeria supports easier LDC acquisition of technology to exploit seabed resources but is among the mors constructive in soaking practical means of implementation. Nigeria is particularly displeased to be excluded from the Gan-jraliaod System of Preferences (GSP) because of its OPEC Like Indonesia, Venezuela, and Ecuador, it considers this treatment unfair because it did not participate in3 oil embargo.
Nigeria7 demands for voting rights within international financialparticularly the IMF and IBRDwhereby tho LDCs wo.ilU got greaterand weight in decisionmaking. ecant IMF quota review, which took into consideration the growing economic power of the OPEC states, eventuatedoubling
of Nigeria's weighted vote to reachercent of the total.) Interestingly, the Nigerianslike many other Third World nationscschow weighting and Arguene-nation, one-vote rule for new organizations, such as the proposed International Saabftd Authority, bacauac this would7 dorunancc.
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Economic Conriicernticris
Nigerian economic development, ongoing alnco independenceccelerated rapidly after theil Loom. Led by petroleum sector dcveloprront and continuing good norfomenca in agriculture, real economic growthercent during the. Temporary distruptio.ns caused
by tensions prior to and in the early stages of the niafran eaur.ed economic growth to doclinuy anercent. Nevertheless, the economy was on the mend avon before the war ended, and the lost ground hdd been recovered Nigeria's present GNPweller capita income of nearly SS0O, Consequently, though backward by OPEC standards, tho country ranks among the middle-income developing countries.
With the fourfold increase in oil prices, thi Nigerian government embarkedassive development plan emphasizing infrastructure,and industrilizaticn. Good performance was achieved lr. the construction, ruinufttcturir.g, and government services sectors. Seal GNP growth in tho first three years, though below planned levels, ercent.
Although Nigeria has progressed reasonably well, the broad economic trends have masked several serious underlying problems.
Agricultural production is not keeping pace with population growth on the averageercent. Higher wages in urban areas attract young farmers to the cities while transportation and storage bottle-neckf! discourage production by the older ones left behind. Once self-sufficient in foods, Nigeria is fastajor importer. Traditional export crops, including pain oil and peanuts, no longer provide surpluses for overseas sales.
9 Despite the plan's major theme of infrastructure
development, port congestion in Lagos is the worst of any OPEC country. At one point, morehips carrying over three million tons of cargo faced berthing delays in excessear. The situation has been eased somewhat by new unloading facilities, but storage is still lacking.
0 The combined rapid rise in government spending, domestic food shortagas, and the delays caused by port congestion contribute to annsul domestic inflation on the orc'.er ofercent.
10
Despite bright economic prospects for the lonrcrigeria is not eliciting especially strong responses from the domestic or foreign private business sectors. Inflation and high start-up costs haverag on tho domestic investment Lagos hoped wouldabouthird of planned development. Fcroijn investors were put off by the indlgenivaticn program which initially colled fcr at leastarcent Nigerian ownership of all businesses. Moreover, an expatriate quota.system has strictly limited the number of non-Kigeriane permitted in each occupation and cau3od shortages of skilled labor in some vital areas.
Oil output has not expanded as planned. Output ceilings and profit disincentives to the oil companiesrop in capacity and exploration activity.epressed oil market brought on by flagging global growth, high ctock levels in consuming countries, and the advent of North Sea, Alaskan, androduction have held down even feasible productionThis situation io made mere, serious by the fact that oil makes upercent of export earnings, ar-cent of GDP,0 porcent of government z'evenues.
On an entirely different scale is the range of sect-economic problems that have grown outpoctacular rate of urbanization. Cities and towns with more0 peoplewhich now take upa quarter of the total populationhave grown at an averagepercent annuallyagos, in particularopulationillion with a
density ofer square mile. In Lagos and other big
eitias, attendant problems of high urban unemployment andovercrowded transportation facilities, exorbitant rents, and traffic congestion rank, with the worst in the Third world. The prospect for rapid improvement in these conditions is dimmedational literacy rate of aboutercent and tribal traditions that /courage continued factionalisr .
The resultant social and political stresses are intensified by rapid accumulations of wealth in the handselatively fevr businessmen and the government elite. Although thehas made seme strides in using petroleum revenues for social betterment, the average Nigerian otill feels that he has benefited little from oil wealth. Urban dwellers grumble over inflation, corruption, and poor living conditions, while low ranking military personnel resent the perquisites of the military elite.
Unfortunately, recent oventsate of economic progress that precludes any prompt improvements in the welfare of the poorer group. Failure toespectable expansion of oil export
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Political Considerations
Nigeria's stance on North-South issues reflects perceptions that it must champion the cause ofAfrican neighbors and that, because of tho lack of reliability of great power motives, it shouldominally nonaligned foreign policy. As growing oil revenues open the prospect of greater economic strength, successive governments have become increasingly independent and assertive in the international realm. the importance of economic ties with the West has precluded any serious drift toward the Comxunist countries. Membership in tho British Commonwealth isomfortable part of foreign policy. On balance, the governmentotential affinity for the US. None of this, however, haskepticism over the prospects for major Western economic concessions to the Third World or concern for the implication of vested Western economic interests in southern Africa.
Much of Nigeria's effort in tho nonaligned movement has been directed toward achieving economic and political gains for the rest of Africa. Unrivaled resourceslarger population, economy, and military establishmentconvince Nigeria that it is destined for continental leadership. 5 Nigeria has played an influential role in the development of, and tho direction Uakon by, tho African unity movements. Along these lines, the government has contributed limited military support
&
and unlirnitod moral support tovarlous African independence movements. Its top priority is the attainmentpeacefully, if ot all possibleof black majority rule in southern Africa. To this end, it is willing to mediate regional disputes in order to keep factionalism fron weakening the struggle for black majority rule and to restrain foreign intervention.
in rough parallel to the Venezuelans, the Nigerian leadership sees itself as having an important coordinating role in regional economicsontribution to make to the development of its neighbors. The Nigerian governments have worked for coordinated development of West Africa and were instrumental in setting up the Economic Community for West African Statesheir standing in ECOWAS has been undercut, however, by tho relatively small amount of economic aid Lagos has been willing to provide. Nigeria has also been unwilling to intercede with other OPEC countries to sell oil to "est Africa at concessionary prices. Moreover, Nigeria has repeatedly refused to lower the prices of its oil exports to these countries.
African attitudes toward Nigeria's leadership aspirations are ambivalent, at best. African states place high value on their individual sovereignty and will not allow Nigeria to be their spokesman on issues of direct concern to them. The countries in close proximity to Nigeria fear being
'
dominated by their giant neighbor. Many countries resent the perceived good economic relations between Nigeria and the West, particularly tho US. None .of the African countries, however, disputes Nigeria's "right" to carry the economic and military burden in the southern African struggle.
The stability of Nigeria's international relations is, of course, dependent in some degree on aspects of domestic politics and the continuation of the policies of the military, government. Some turbulence is inevitable when political campaigning is again permitted this October in anticipationeturn to civilian rule by Differences in living standards and longstanding ethnic tensionsase for turmoil in that setting that could lead to another military coup. The principal foreign targets of any reconstituted government would likely be Western attitudes toward majority rule in southern Africa,eterioration in US relations likely if present initiatives fell apart.
Outlook
iable alternative, Nigeria would probably like to lessen its economic dependence on the West, if for no other reason than to enhance its image with its poorer neighbors and the more socialist-leaning" countries in the Third World. Economic realities outweigh most otherhowever. The developed countries will remain Nigeria's chief export market and supplier of imports, and dependence on international capital markets will grow. Prospects of stronger economic ties with the Third World offer few benefits since these countries have little that Nigeria needs and are mainly interested in obtaining oil on concessional terms. Economic relations with the Soviet bloc are not particularly attractive, although Nigeria does secure certain sophisticated weapons from the USSR, in part to keeplausible alternative.
Despite the prospect for continuing strong economio ties, Nigeria will continue to be at odds with the west on tho political front. There is no reason to expect Nigeria to cease giving verbal and moral support7 demands or to change its stances on key issues. Lagos will continue toesponsibility to champion the causes of other LDCs. More important than the North-South dialogue in the future of Nigerian international
Original document.
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