EXPORT DEVELOPMENT PROGRAMS OF NIGERIA

?FL? Major structural changes have affected the Nigerian economy during the past two decades. It changed from a predominantly agricultural economy to an oil export economy, and for a brief period oil revenues were used to finance economic development. The government accumulated enormous debts during the economic boom, and when oil prices declined Nigeria found itself with a huge trade deficit and a shortage of foreign exchange. Policies designed to control inflation artificially reduced the cost of foreign imports. Cheap imports flooded the country and choked off domestic agricultural and industrial production. Major economic reforms were initiated in 1986 which reduced imports and improved the prospects for export expansion, but the country still faces serious problems with foreign debt a lack of foreign exchange.

Traditionally, agriculture had been the foundation of the Nigerian economy. The country's petroleum reserves were an asset, but the value of crude oil was much less significant during the era of weak oil prices prior to 1973. When OPEC managed to increase oil prices four-fold in 1973, Nigerian oil became much more important in economic development plans. Suddenly, the country enjoyed a surge in oil export revenue, and the funds were used to finance the development of roads, ports, education, public housing, and state-owned industries which were capital intensive.?FN1"Economic Reforms Make Nigeria Attractive Aga

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tives, and it has altered both sides of Nigeria's foreign trade equation. In 1984, one naria was worth about $1.31 in U.S. currency. By 1987, the value was set at about $.25 in U.S. currency.?FN1International Monetary Fund, "Nigeria," ?MDUL?International Financial Statistics?MDNM?, Vol. XLI, No. 10. (October, 1988) p. 392. ? This means that exports valued at 100 naria would have cost a U.S. buyer $131 in 1984 and only $25 in 1987. Conversely, imports valued at $100 would have cost Nigerians $76 in 1984 and $400 in 1987. Clearly, this policy should stimulate Nigerian exports while choking off the domestic demand for imports. It is an export development program. The revised exchange rate had an immediate effect on the agricultural sector. When food imports were so cheap, many farmers only grew food for personal consumption, rather than produce at a loss. By late-1987, prices for cash crops "such as cocoa and cotton (had) risen by as much as 300 percent," and farmers responded to these new incentives by expanding produc-tion.?FN1"Economic Reforms..., p. 15. ? Rubber trees were put back into production, and prices for palm oil and groundnuts also increased substantially. Additionally, many foreign investors were d
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Approximate Word count = 1787
Approximate Pages = 7 (250 words per page)