DFID's Programme in Nigeria - International Development Committee Contents


Nigeria's regional and global significance

6. Nigeria is the second largest economy in sub-Saharan Africa (after South Africa) and the biggest economic power in West Africa, generating two-thirds of the region's Gross Domestic Product (GDP).[3] It is Africa's most populous country. Nigeria is a leading member of the Commonwealth, the New Partnership for Africa's Development (NEPAD) and the Economic Community of West African States (ECOWAS). It is also a major contributor to peace-keeping in Africa. The World Bank describes Nigeria as "a regional giant" and says that if it could increase its growth and prosperity and make more progress towards the Millennium Development Goals (MDGs), this "would translate to gains in social and economic progress for the whole region."[4] DFID and the World Bank assess that:

    Nigeria's role in strengthening regional integration, its efforts at financial market integration, at ports and customs modernisation, to improve access to energy and sustainable land and water resources, and to align trade regimes to regional agreements are all important for the region's development.[5]

7. Nigeria is Africa's largest oil producer and the tenth largest oil producer in the world. However, "corruption and poor governance mean that [oil] resources are not being translated into benefits for the poor".[6] Moreover, a recent report from the UN Office on Drugs and Crime found that the present instability in the oil-producing Niger Delta was the "greatest rule of law challenge confronting the [West Africa] region. It directly destabilises the most powerful economy in the region, with implications far beyond the Niger Delta".[7] We discuss the challenges of oil wealth and the Delta in Chapter 5.

The context for poverty reduction in Nigeria


8. Nigeria's population was estimated to be 148 million in 2007 (with a growth rate of over 2.8%).[8] One of its 36 States, Lagos, is itself larger in population terms than 32 African countries.[9] Although recent World Bank statistics show an improvement in per capita GNI from $270 in 2004 to $920 in 2007, more than half the population lives in poverty.[10] 20% of Africa's poor people live in Nigeria; India and China are the only countries with more poor people. Without significant progress in Nigeria, the Millennium Development Goals (MDGs), which aim to improve people's lives through poverty reduction and increased access to basic services, are very unlikely to be met globally. The World Bank's assessment is that "Africa will fail to meet the MDGs if Nigeria fails, given that one in five Africans is a Nigerian."[11] Nigeria is not currently on track to meet any of the MDGs.[12]

9. Nigeria is a diverse and complex country as well as a large one and donors say that this "creates huge challenges".[13] One of our witnesses, Dr Raufu Mustapha of the Oxford Department for International Development, described Nigeria as "a country characterised by intense ethnic polarisation and conflict".[14] The north of the country is mainly Islamic and the south Christian. The World Bank states that Nigeria has 200 ethnic groups and 500 indigenous languages.[15] Dr Mustapha estimates the number of ethnic groups to be even higher, at 374. These are divided into ethnic "majorities" and "minorities". The major ethnic groups are the Hausa-Faluni in the north; the Yoruba in the south-west; and the Igbo of the south-east. These three groups represent over half the population. There are also large minorities such as the Ijaw, Kanuri, Edo, Ibibio and Nupe.[16]

10. Ethnic divisions contribute to disparities in wealth and access to services: it has been estimated that a third of Nigeria's poor are concentrated in the three north-west states of Kaduna, Kano and Sokoto. Ethnic and religious differences can also lead to conflict and violence. In July 2009, hundreds of people died in three northern Nigerian states when followers of a radical Islamic cleric were involved in armed clashes with security forces.[17]


11. DFID says that one of the major challenges to Nigeria realising its full potential is weak governance.[18] Nigeria was under military rule for more than 30 years between 1967 and 1999. Civilian rule was re-established in 1999 when President Obasanjo was elected. He served for two terms, until 2007, when President Yar'Adua took office (although this was only after the Senate had blocked President Obasanjo's attempt to secure a third term). This was the first peaceful transition from one democratically elected government to another in Nigeria's history, although it followed what were widely recognised as seriously flawed elections.[19]

12. The legacy of military rule is institutional weakness and lack of capacity at all levels. There is a very low base of public finance management skills and no cadre of experienced civil servants. When civilian rule began again in 1999, some states had no budgeting system in place because military governors had felt no need for them. Governance structures have been corroded and systems for basic service delivery and infrastructure are lacking.

13. Nigeria has a federal structure which DFID says "has contributed to the survival of Nigeria as a cohesive nation".[20] The country is divided into six regional zones and 36 States.[21] The State governments spend 50% of public funds and have a high degree of autonomy. They take lead responsibility for delivery of basic services, together with the 774 local government areas (LGAs) within states. This is, however, hampered by a lack of coordination and cooperation between the three tiers of government. States are not required under the constitution to account to the Federal Government for the use of the funds allocated to them. The quality of State and local governments varies but is assessed as being "characterised by particularly weak institutional capacities". The Country Partnership Strategy identifies the main deficiencies in government as:

  • limited transparency and accountability in public resource management at all levels of government, exacerbated by weak sanctions;
  • low capacity of the civil service to implement programmes;
  • an ineffective judicial system;
  • limited effectiveness of State assemblies;
  • an absence of social accountability mechanisms to give voice to citizens' views on government services.[22]

Infrastructure and basic services

14. The inadequacy of infrastructure to support provision of basic services is a major obstacle to growth in Nigeria. The power sector is a particular problem. For its 150 million people, Nigeria manages to generate around 1,800-2,000 megawatts (Mw) of electricity, the equivalent of the power consumption of the city of Bradford in England which has a population of 300,000. By comparison, South Africa has a generation capacity of 45,000 Mw for its population of 48 million.[23] Lagos is a vibrant and dynamic city which contributes 12% of Nigeria's GDP. It is also chaotic: its infrastructure was designed for 1 million people but supports a population of 15 million which is expected to reach 20 million by 2010, when it will overtake Cairo as Africa's biggest city and become one of the ten most populated cities in the world. [24]

15. 55% of Nigeria's population live on less than $1 a day; 29% of children are under-weight; less than half the rural population has access to a safe water supply.[25] The World Health Organisation (WHO) has ranked the Nigerian health system 187th out of 191 member states. Nigeria is off-track on all the health-related MDGs. Child and maternal mortality rates are extremely high, especially in the north of the country. One in every five children dies before the age of 5. Only 20% of children are fully immunised. Nigeria is also only one of only four countries globally where the polio virus is still circulating. Both DFID and Save the Children characterise Nigeria's primary health care services as being in a state of collapse.[26] Nigeria remains off-track on both education MDGs (achieving universal basic education and eliminating gender disparity in primary and secondary education). Nigeria has the most primary age children "out of school" of any country in the world, currently estimated at 8 million. The primary education net enrolment rate is around 63% and has improved only a little in the last decade.[27]


16. DFID describes Nigeria as "a classic example of a resource-dependent developing country." It says that "the discovery of oil in the 1960s, and the subsequent mismanagement of the revenues have had a profound impact on economic growth, the political economy and on the relationship between citizen and state."[28] The negative impact of resource wealth (often known as "Dutch disease") arises from large inflows of foreign capital and resulting high currency exchange rates, which makes manufacturing non-competitive and encourages de-industrialisation. In resource-rich states, politics and public services also frequently become entangled with business interests, which feeds corruption and mismanagement.[29] DFID points to Nigeria's "oil curse" as the cause of its many years of political and economic instability including 30 years of military rule.[30]

17. Oil provides 85% of government revenue and over 95% of export earnings and is therefore the dominant factor in both the economics and the politics of the country.[31] The World Bank points to systematic and prolonged mismanagement of oil revenues, which has "fuelled corruption, undermined trust and ultimately held development back".[32] The oil sector provides few jobs for Nigerians: it accounts for around 40% of GDP, but employs less than 1% of the workforce.[33] We were told during our visit that there is a pervasive view that the country has been blessed with oil and that there is therefore no need to do anything else to generate economic activity. The value of oil wealth also has to be put in perspective. Revenue even from 2.5 million barrels a day (a target which is not being reached at present) is about $150 million a day (with the oil price at $60 per barrel). With a population of 150 million, this is barely $1 per person per day. In 2006, estimated GDP was over $100 billion but this equates to less than $800 per capita.[34]

18. Nigeria has also been hard hit by the global economic downturn and the resulting reduction in world oil prices, which fell from a peak of $147 a barrel in July 2008 to a low of $40 in early 2009.[35] This has been compounded by a fall in output arising from increased instability in the oil-producing Delta region. Monthly oil revenue fell to $1 billion in January 2009 from an average of $2.2 billion in 2008.[36] DFID asserts that the global economic crisis has heightened the challenges to growth, development and poverty reduction which Nigeria already faced and which it believes "still emanate from within Nigeria."[37] These challenges are demonstrated at their most extreme in the Niger Delta where criminality, political power struggles and genuine grievances of local people about lack of basic services all interact, fuelling violence and insecurity.[38] After a brief lull following the 2007 elections, conflict in the Delta has re-emerged as a major security threat, with kidnappings of both Nigerians and foreign nationals and attacks on local communities and oil installations.[39]

Debt relief

19. In September 2005, Nigeria received the biggest ever debt relief package from the so-called "Paris Club"—an informal group of the world's richest countries, including the UK. The debt relief deal was worth $18 billion and represented a reduction of about 60% of Nigeria's overall debt to the Paris Club of about $30 billion.[40] The UK's share of the debt relief was £2.85 billion.[41] Nigeria's external debt now stands at less than 4% of GDP.[42]

20. The Paris Club debt deal generated annual savings of US$1 billion. US$750 million of this goes to the Federal Government budget and US$250 million to the States. The federal share is used to boost efforts to meet the MDGs and is ring-fenced in a "virtual poverty fund" which allocates resources to specific projects and programmes including in health, education, water and social safety net programmes. The Federal Government also uses Debt Relief Gains to improve service delivery and strengthen inter-governmental co-operation through the Conditional Grants Scheme for States.[43] In Abuja, we met the Senior Special Assistant to the President on the MDGs whose office oversees expenditure from the debt relief gains. She gave us some examples of how the money had been spent including: training and recruitment of 40,000 new teachers; and the construction of 57 new primary healthcare centres.

DFID's Programme

21. DFID's budget in Nigeria for 2009-10 is £120 million having risen from £32 million in 2003-04.[44] Since 2005, DFID has operated a joint Country Partnership Strategy (CPS) with the World Bank.[45] A new CPS, which will cover the period to 2013, and in which the African Development Bank (AfDB) and the United States Agency for International Development (USAID) will also participate, was approved by the World Bank board on 28 July 2009, following earlier approval by DFID and the other partners.[46] The 2005-09 CPS supported Nigeria's own priorities for development and focused on economic growth and poverty reduction; improving governance and accountability; and improving human development, particularly in health, education and HIV/AIDS.[47] The new CPS has a similar focus "to transform and diversify Nigeria's economy" by improving governance; maintaining non-oil growth; and promoting human development.[48]

22. 75% of DFID's expenditure in Nigeria is on technical assistance; 20% is spent on MDG-related projects; and 5% goes to civil society organisations. 60% of expenditure is at State level, where the main responsibility for delivery of services lies.[49] DFID established an office in Abuja in 2001 and now also has regional offices in Enugu, Lagos and Kano States.[50] Kano and Lagos are the two largest States in Nigeria which between them contain 15% of the national population.[51]

23. Few other bilateral donor agencies operate in Nigeria. The biggest donors are the World Bank, USAID, the AfDB and the European Commission.[52] Nigeria is not an aid-dependent country: indeed aid represents less than 1% of GDP. This compares to a sub-Saharan African average of 10%. DFID says that this influences the way it operates in the country: it seeks to leverage better use of Nigeria's own resources rather than focusing on transfer of resources. [53]

24. DFID has programmes in a limited number of States—currently four—"which have demonstrated commitment to reform and to poverty reduction".[54] Gareth Thomas MP, the Minister of State for International Development, told us that DFID certainly did not choose to work only in the States with the fewest problems or the best governance: the States in which it worked had "significant challenges". However, it was necessary for DFID to avoid the risk of spreading its impact too thinly and to operate where its resources would have the most impact.[55]

25. The Minister's view was that DFID's strategy of picking a few states in which to work at a "deep level" was the correct one and should continue:

    Our judgment has been that it is clearly more sensible to work in those states and with those institutions that are most keen to have access to expertise and advice and who are most committed to trying to tackle poverty in their areas. That has certainly informed the choice of states where we have worked. I do not think you can say that Kano state or Jigawa state are amongst the most well off states.[56]

However, the new Country Partnership Strategy points out that the lead state approach raised issues in relation to the "geopolitical balance" among Nigeria's six regions and that, for this reason, the partners will move away from a single set of lead states. Instead, "state selections will be based on states' needs, agreement with Government, state level governance capacity and commitment, geopolitical balance" and existing programmes.[57] Mr Thomas highlighted that DFID was working at some level in 21 out of the 36 States. We saw the example of a community policing project during our visit which is being implemented to some extent in 18 States.[58] The Minster asserted that DFID had shown a willingness to respond positively to specific requests from the Government to extend programmes to States beyond the focus ones.[59] He believed that DFID's success in its focus States could have a wider effect in terms of sharing experience and learning lessons, both through DFID's relationship with the Federal Government and from States learning from each other.[60]

26. In such a vast and diverse country, we believe that DFID is right to focus on a limited number of States where the standards of governance are sufficient to permit an aid programme to operate at a meaningful level and have a significant impact. These focus States need to be chosen carefully and to reflect DFID's overriding priority of poverty reduction. The Federal Government and the focus States should be encouraged and supported to share information about successful programmes so that other States can replicate them using their own resources.

3   Q 174 Back

4   Country Partnership Strategy 2005-09, para 1 Back

5   Country Partnership Strategy 2009-13, para 25 Back

6   Ev 85 Back

7   Transnational Trafficking and the Rule of Law in West Africa: a threat assessment, UN Office on Drugs and Crime, July 2009, Executive Summary, p 8 Back

8   World Bank country statistics on Nigeria, available at www.worldbank.org Back

9   Country Partnership Strategy 2005-09, Executive Summary Back

10   World Bank country statistics on Nigeria, available at www.worldbank.org Back

11   Country Partnership Strategy 2005-09, para 25 Back

12   Ev 52 Back

13   Country Partnership Strategy 2009-13, para 39 Back

14   Ethnic Structure, Inequality and Governance of the Public Sector in Nigeria, Dr Raufu Mustapha, November 2006 Back

15   Country Partnership Strategy 2009-13, para 39 Back

16   Ethnic Structure, Inequality and Governance of the Public Sector in Nigeria, Dr Raufu Mustapha, November 2006 Back

17   "Islamist sect leader shot dead after 600 killed in Nigeria siege" The Times, 31 July 2009 Back

18   Ev 52  Back

19   Ev 51 and 54; see also Country Partnership Strategy 2009-2013, para 1 Back

20   Country Partnership Strategy 2005-09, para 31 Back

21   See map at Ev 51 Back

22   Country Partnership Strategy 2009-13, para 40 Back

23   "A long embrace with the dark", Financial Times, 21 July 2009 and World Bank country statistics Back

24   Ev 93, 95; Country Partnership Strategy 2009-13, para 32. See also "Everyone's sleeping with one eye open; what's it like to live in the middle of a population explosion?", The Guardian, 9 May 2009 Back

25   Country Partnership Strategy, 2005-09, para 34, Table 1 Back

26   Ev 61 and Ev 80 Back

27   Ev 85 Back

28   Ev 86 Back

29   Country Partnership Strategy 2005-09, Box 1 Back

30   Country Partnership Strategy 2005-09, para 26 Back

31   Country Partnership Strategy 2009-2013, Executive Summary, para 1 Back

32   Country Partnership Strategy 2005-09, para 27 Back

33   Ev 54 and 91 Back

34   FCO Nigeria Country Profile Back

35   Country Partnership Strategy 2009-13, para 10 Back

36   Ev 90 Back

37   Ev 90 Back

38   Transnational Trafficking and the Rule of Law in West Africa: a threat assessment, UN Office on Drugs and Crime, July 2009, Executive Summary, p 8 and p 72 Back

39   Ev 70 Back

40   "Paris Club agrees on a comprehensive treatment of Nigeria's debt", Paris Club press release, 20 October 2005 Back

41   DFID, Statistics on International Development 2007 and 2008. The UK cancelled £1,649 million in 2006/07 and £1,135 million in 2005/06. See also DFID Millennium Development Goal Factsheet on Debt, November 2008 Back

42   Ev 65 Back

43   Ev 65 Back

44   Ev 53; Country Partnership Strategy 2005-09, para 15 Back

45   World Bank Group and Department for International Development (UK) Country Partnership Strategy for the Federal Republic of Nigeria (2005-2009), 2 June 2005 Back

46   Ev 86 Back

47   Ev 54 Back

48   Country Partnership Strategy 2009-13, Executive Summary, para 6 Back

49   Ev 86 Back

50   Ev 54 Back

51   Ev 87 Back

52   Ev 54 Back

53   Ev 56 Back

54   Ev 56; Q 106 Back

55   Q 107 Back

56   Q 145 Back

57   Country Partnership Strategy 2009-13, Executive Summary, para 12 Back

58   Ev 106 Back

59   Q 106 Back

60   Qq 107-108 Back

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Prepared 23 October 2009