ECONOMIC GAINS IN ELEVEN YEARS OF DEMOCRATIC RULE IN NIGERIA

By Yinka Otoki

The Nigerian economy suffered severe setbacks during the long years of military rule in the country. The era witnessed a stunted economy hindered by years of corruption and mismanagement. But the restoration of democracy and subsequent economic reforms by the civilian administrations has successfully put the country back on the path of achieving its full economic potential as a frontline economy in Africa .

During the oil boom of the 1970s, Nigeria accumulated a significant foreign reserve to finance major infrastructural investments. With the oil glut of the 1980s, Nigeria struggled to keep up with its loan payments and eventually defaulted on its principal debt repayments, limiting repayment to the interest portion of the loans. Arrears and penalty interest accumulated on the unpaid principal which increased the size of the debt.

Most of the debts were taken by the military regimes that occupied Nigeria 's political scene for more than three decades. However, in 2005 barely six years into democratic rule, negotiations were opened with the Paris Club of creditors, with Nigeria repurchasing its debt at a discount of approximately sixty percent, using part of its oil profits to pay the residual forty percent, freeing up at least one point one five billion dollars annually for poverty reduction programmes.

In April 2006, it made history by becoming the first African country to completely pay off its debt estimated at thirty billion dollars owed to the Paris Club.

Oil production reached two point seven million barrels per day in 2006 but dropped significantly due to the restiveness in the Niger Delta region. However, the present administration came up with an amnesty as well as a reintegration and rehabilitation programme for militants . The former militants have since laid down their arms and peace has since been restored to the Niger Delta. Oil production activities have resumed bringing about an increase in the country's daily crude oil production output to two point two million barrels per day. .

Another feat recorded under the democratic rule is the astronomical growth of the Information and Communication Technologies Industry. In the last eight years, over sixty-eight million telephone lines have so far been connected as against the subscriber level of less than zero point five million in July 2001.

Similarly, government expanded the nation's telecommunications infrastructure to space based communications. Nigeria has a space satellite which is monitored by the Nigerian National Space Research and Development Agency.

Similarly, the Nigerian financial sector has witnessed a lot of changes since the nation returned to a democratic rule in 1999. Nevertheless, since the restoration of democratic rule, the Central of Bank of Nigeria (CBN) instituted series of guidelines on corporate governance for banks in the country to restore the culture of integrity.

Consequently in 2004, the CBN introduced reforms in the Banking Sector designed to put the country's banking industry on a much stronger footing by de-fragmenting the sector through the merger of smaller banks. CBN's ability to reform the banking sector contributed to the boom in oil prices that increased the nation's Gross Domestic Product by five point two percent in 2005.

The challenges posed to the world economy by the economic meltdown in 2009 brought uncertainty to the Nigerian economy which made the Central Bank of Nigeria to embark on another round of reforms to enshrine good corporate governance. As a result of these reforms, the apex bank had to bail out ten ailing banks sacked their chief executives as well as placed a limit to tenure of bank CEOs and Executive Directors in the country.

As part of efforts to transform the economy on sustained basis, the Federal Government is currently undertaking far-reaching economic reforms that are anchored on the National Vision 20:2020 strategic development initiative.

The key element of the vision is to triple the present size of the GDP of below three hundred billion dollars to not less than nine hundred billion dollars, and a per capita income of not less than four thousand dollars per annum, with a view to placing Nigeria among the top twenty economies of the world by the year 2020.

Many financial experts have indicated that Nigeria 's outlook for 2010 is stable. One of such is the Fitch Ratings which affirmed the long term foreign currency Issuer Default Ratings at BB minus and local currency Issuer Default Ratings at BB. The Agency further affirmed the short-term foreign currency Issuer Default rating at B and the Country Ceiling at BB minus.

These ratings also endorsed Nigeria 's macroeconomic stability and strong external reserves position. Undoubtedly, Nigeria 's macroeconomic environment is bright and the outlook is promising with reasonable macroeconomic stability.