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Historicising Nigeria’s persistent economic failures 06 Nov 2025

Nigeria and many African countries emerged from colonial rule with a strong aspiration and determination to achieve economic development, which will see their economies converge with those of developed Western countries in terms of economic growth and well-being. This dream never materialised or has not materialised since independence. The failure to achieve sustained high economic growth and the lack of transformation in economic well-being in these countries have raised questions about whether there will ever be convergence in economic outcomes. Africa, and perhaps Latin America, are the only continents that have not achieved economic convergence since that became the concern of development economists since the end of the Second World War. Based on development data, one could say, with Harvard’s Lant Pritchett, that instead of converging, Africa is diverging big time. African economies are diverging from sustained high growth and human development. Today, extreme poverty is mostly exclusively an African experience. 

So, why has development faltered in Nigeria and in the rest of Africa? The answer is in the past, in the history of economic development in Nigeria and other African countries. Nigeria’s economic development trajectory has been incoherent and ineffective. The nation’s development programmes and processes do not show the level of coherence and consistency that can translate to the sort of economic transformation experienced in East Asia. Although Nigeria has witnessed periods of high economic growth, like between 2002 and 2012, a decade when Nigeria saw both a boom in commodity prices as well as better husbanding of macroeconomic fundamentals, unfortunately, and consistent with past experiences, this decade of high economic growth did not result in economic transformation measured by a massive reduction in poverty and transition into an industrial society. Better husbanding of export earnings did not change the structural distortions and constraints of the Nigerian economy. What is the problem?

The problem is that Nigeria’s economic policymaking is neoliberal and not developmentalist. Neoliberalism, as applied in the adoption of economic policies and strategies, speaks to the core ideas of a market-oriented economy with little role for government except for mere regulatory functions relating to dealing with market failure. This restriction of state involvement in the economy comes from the lack of development ambition and not paying attention to lessons learnt from successful efforts in catching up, especially from Asia. Neoliberalism in the context of economic development leads to incoherence to the extent that development goals are undercut by haphazard policymaking in critical areas that drive economic transformation.

Many people blame colonial rule for the tragedy of development failure in African countries. The ‘colonialism explanation’ of economic failure focuses so much on the exploitative nature of colonial rule, how colonial authorities stole resources and capital from Africa to serve colonial economic interests, rather than the distortionary and stultifying nature of colonial rules. Furthermore, as Daren Acemoglu and his coauthors have argued, colonialism stunts sustained economic growth in former colonies through the entrenchment of extractive institutions rather than inclusive institutions. These explanations are inadequate and even superficial. I think the real cause of the underdevelopment of these former colonies is that the historical patterns of economic planning in colonial and postcolonial periods in these countries were never about economic transformation through industrialisation. It was and has always been about making these countries an appendage to the global economy as suppliers of natural resources or semi-finished products in return for improvement in living conditions, infrastructure, and human capital. The colonial and post-colonial managers of these economies never bothered much about industrial transformation and did not want to focus on economic growth as such. 

We can illustrate the truth of this assertion by considering the history of development planning in Nigeria that began in the 1940s, long before independence. The first real colonial development plan was in 1946, and it created the Development Department in the colonial government with the responsibility to coordinate development efforts in regions, provinces, and districts. The plan was presaged by debate over the orientation of economic development planning for the colonials. Two perspectives struggled for dominance: the ‘welfarist and productionst’. The welfarists believe that economic development should focus on improving the well-being of Nigerians,  education, and the supply of critical manpower for the civil service of the colony. The productionists argue that economic planning should focus on enhancing the productivity of the colonies and that economic growth itself will create momentum for social welfare. 

The welfarist argument won. As F.E.V. Smith, a high-ranking colonial officer put is, for the colonists, “The fundamental necessity was not so much development as welfare and spectacular development could not be looked for until the basic necessities of life had been provided; when this is done the productive capacity of the people as a whole could be improved and could be absorbed into some form of economic development”. This contrasted with the views of Sydney Cain for the productionists, who argued for a focus on productivity and economic growth. 

The problem with development in Nigeria, as in most of colonised Africa, is that the proponents of economic planning were not concerned about economic transformation in the sense of transforming the structure of underdevelopment, as the founders of Asian economic miracles were concerned. They wanted to lessen the debt burden, provide basic infrastructures that enable more profitable extraction, and improve human capital to service mercantilism at its basest levels. That was the focus in 1945. That has remained the focus in 2025. 

The path to economic failure will persist until there is a radical disruption.

Sam Amadi, PhD, a former Chairman of the Nigerian Electricity Regulatory Commission, is the Director of Abuja School of Social and Political Thoughts.