Economic reforms was first introduced in Nigeria in 2003, during the second term of President Olusegun Obasanjo. The reform program was known as the National Economic Empowerment and Development Strategy. The government aimed to improve the macroeconomic environment within Nigeria and to better manage public expenditures. Structural reforms played a large role as well.
Reasons Behind the Reform:
- During 1999, human development indicators of Nigeria were below average in comparison with other developing economies.
- Nigeria depended strongly on its oil export business, leading the country vulnerable to fluctuations in oil prices.
- Volatile fiscal spendings were destabilizing the country’s macroeconomic conditions.
- This volatile economic environment deterred private investment; at the same time, government expenditures were rising.
- The unemployment rate in Nigeria was quite high.
- The amount of domestic debt was increasing along with the rate of inflation. In 1999, the inflation rate was 10.4%, whereas in 2003 it climbed up to 21.8%.
- The Nigerian citizens average income per capita was very low, below $300.
The government’s plan to tackle these problems included structural, institutional, governance, and macroeconomic reforms.
Moreover, the Nigerian government started to extend the reform process to the regional level. They worked to diversify the economy away from oil, in order to improve the domestic business climate.
Impacts of Economic Reform:
The standard of living for the average Nigerian has improved, and unemployment rates have decreased slightly.