NATIONAL ECONOMIC PLANNING:
THE CHALLENGE OF GLOBALIZATION

BY

PROFESSOR EGHOSA OSAGIE DIRECTOR OF STUDIES,

NATIONAL INSTITUTE FOR POLICY AND STRATEGIC STUDIES (NIPSS), KURU.

Contribution to a symposium in honour of late Professor Ojetunji Aboyade held at the
Trenchard hall, University of Ibadan, Ibadan on Friday, September 10, 1999.

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ECONOMIC PLANNING THE CHALLENGE CFGLOBALISATIQN
1.0 Introduction
I would like to put on record my appreciation to the Governing Board of the
Development Policy Centre for inviting me to participate in this symposium. This centre
now occupies a position of leadership and excellence among non-governmental think
tanks in the African continent. The choice of the topic of this symposium is a clear
testimony to the relevance of the Centre to the solution of the most critical problems that
are most likely to confront Nigeria in the early years of the twenty-first century.
Distinguished ladies and gentlemen, we honour today a pioneering and renowned scholar
among Nigerian economists. A teacher and administrator, his genius in policy analysis
with particular reference to national economic planning touched in a meaningful way,
generations of official planners and students of economics, indeed, this symposium
provides a ready opportunity to ponder a number of nagging questions about Nigerian
economists and the critically sensitive issue of policy analysis and advocacy. To be
specific, what is the relevance of the professionally trained Nigerian economist to the
solution of national economic problems? What roles should be played by Nigerian
economists in the resolution of the national economic crisis which itself is the logical
product of the adoption of the essentially market-oriented Structural Adjustment
Programme in the 1980s and 1990s? Indeed, why is it that in the final year of the
twentieth century, reputable economists are shying away from key appointments in the
Nigerian public sector as they readily embrace opportunities for professional service in
multinational, international, and private sector organisations?
2.0 Recent Developments in Policies and Practices
I return to the idea of national economic planning. In the first half of the twentieth
century, the now defunct Soviet Union and the more pragmatic Peoples Republic of

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China demonstrated unambiguously the possibility of employing centralised economic
planning organised within the framework of Marxian socialism to transform
underdeveloped societies into modern industrial economies, it was therefore not
surprising that such former colonies/protectorates as India, Ghana, and Nigeria adopted
some form of economic planning in the early post-independence years as a reliable and
tested instrument for attaining national economic development. These planning models
tended to be centralised as national bureaucracies under the political leadership worked
out technicalities, produced plan documents, and implemented plans. More important,
they provided for considerable state control and participation in the ownership structure
of new industrial enterprises set up. These largely aggregative economic plans
emphasized the specifications of national objectives, targets, sectoral and macroeconomic
analysis giving insights into the magnitude for resource constraints and the required
accommodation in the form of external loans or grants. In many African countries, the
plan was seen as a means for justifying requests for foreign assistance. In the specific
Nigerian case, the first and second national economic plans did not adequately provide
for meaningful participation of the private sector, particularly the informal sector and
community development associations in plan formulation and implementation. Nigerian
planning placed more emphasis on objectives, aggregative plan projections, strategies for
plan implementation at the expense of the social and economic problems to be solved by
the plan. In spite of these mild shortcomings, there is no doubt that national economic
planning in Nigeria provided a solid foundation for economic stability. Exchange rates
were fixed and stable, policies and programmes were directed at attainment of steady and
sustainable growth, the structure of prices and costs was jealously guarded against large
destabilizing and discontinuous increases, and an atmosphere of confidence was
generated by governments that largely strove to respect the accepted norms of civilized
governance. The mixed economy principles provided an ideological supports of sorts to
this stable system which was rudely disrupted by the introduction of the Structural
Adjustment Programme in 1986.

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In the 1980s, many African countries suffered from domestic and external imbalances
necessitating some bold policy initiatives to restore stability and growth. In Nigeria, the
path chosen was that of Structural Adjustment Programme whose theoretical prototype
had been developed by the Bretton Woods International Financial Institutions,
themselves significantly influenced by Western conservative economic though. Under
SAP, production was to be stimulated, consumption disciplined (reduced) within a policy
package control/participation in the economy were to be reduced. Exchange rates
determination was left to the whims and caprices of the so-called “free market”, staff
rationalization was implemented in the public sector, privatization and commercialization
reduced public sector industrial ownership and reduced subventions to parastatals, and
subsidies on petroleum products, fertilizers etc. were wither reduced or eliminated.
The new free market orientation of SAP has had distinctly adverse effects on planning in
Nigeria. Commitment to market determination of prices was antithetical to the concept
and practice of planning. It was therefore necessary economic planners during the SAP
period to find ways of reducing the importance of planning in policy formulation. The
most method of attaining this goal was the adoption of the rolling plan which did not
seriously incorporate detailed technical processes in the former planning formal.
Implementation of rolling plans took the form of elaborating in annual capital budgets the
rolling plan’s estimate for the particular year In addition, the making of rolling plans in
the absence of a medium term perspective plan during the SAP years call into question
the long-term consistency of rolling plans which are supposed to be short-term segments
of a perspective plan. Another method of reducing the value of plans is to increase their
number instead of the previous 4-year plan, the system was inundated by all types of
plans, such as the World Bank oriented Medium-Term Programme, the perspective plan,
me Vision 2010 Report and of course the rolling plans We shall demonstrate that in the
extremely competitive and uncertain environment introduced by globalization, what the
nation needs is reduction in the role of national economic planning but strengthened and
restructured planning.

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An important aspects of a rapidly globalising world economic system is its volatility, its
great potential for instability. Wide swings in exchange rates massive movements of
capital from one country to the other and relatively large percentage changes in the world
price of crude oil have disrupted, even distorted, national economies. In the specific
Nigerian case, misguided series of devaluation of the naira exchange rate from panty with
the dollar to less than one US cent to the naira and wide fluctuations in the price of crude
oil have resulted in capital losses for public and private sector institutions and created
formidable problems for official budgeting In these circumstances, there is need for more
detailed planning to tire care of competing scenarios, and providing for sensitivity
analysis for each alternative scenario.
3.0 Globalization
In the twenty-first century, the world economy will be completely globalised Countries
that exhibit reluctance to be incorporated into it w miss out on opportunities and
challenges inherent in it Globalisation implies the elimination of barriers to trade in
goods and services worldwide, the ability of transnational corporations to produce and
market anywhere in the world without running into any forms of protectionist
restrictions; the utilization of Information and Communication Technology (ICT) to
transmit and receive services using computers, the telephone and satellite
communication, in the process by-passing national telecommunications channels.
The process of globalization has been encouraged, among other things, by rapid advances
in information Technology, the establishment of the World Trade Ogranisation (WTO),
mergers and acquisition among major corporations, large-scale capital flows between
countries, the equalization of operating conditions for domestic and foreign investors, and
increased trade in services with the aid of computer networking, resulting in
internationalization of services which may rightly be considered as providing the impetus
for globalization.

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In popular parlance, the process of globalization as contained in the Uruguay Round
Agreement, is seen as leveling the playing ground for all countries so far as international
trade is concerned. In the emerging system, comparative advantage in production will no
longer be determined by relative resources-abundance, but by technological innovation,
which, in turn, is determined by applied research, Research and Development (R&D)
activities, and commercialization of R & D findings. In the new system, research and
capacity building are of the utmost importance. All economic transactors, including
governments, corporations, community-based organizations would have to plan
effectively if they are to survive.
4.0 Planning in a Globalized World
Concerning national economic planning, it can confidently be said that Nigeria, and
indeed, all countries would have a greater need for it in a globalised economy of the
twenty-first century. There would be two over-riding needs or problems that must be
addressed by planning in the new system.
These are:
Solving social and economic problems of Nigerians living at the grassroots level.
Coming to terms with the problem of remaining competitive in a globalised system, in
particular making rapid technological progress and organizing continuous capacity
building to make Nigerian products internationally competitive.
If these two closely related problems/needs are adequately addressed, the specific
objectives of raising the standard of living, elimination of poverty, creating employment
opportunities, and improving the quality of infrastructure would be easily achieved. In the
new approach to planning, there will be no room for such ideologically motivated
arguments over such issues as privatization, market-determination of key macroeconomic
variables, the percentage share ownership held by government or the private sector. What
matters is efficiency of production which in turns guarantees international
competitiveness as well as meeting the basic needs of the common people.

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The Organisation of Planning
In view of its increased importance, planning at each tier would be organised within an
institution that reports directly to the Presidency or Chief Executive. Specifically, at the
federal level, the National Planning Commission would be placed in the Presidency. It
would collect and collate technological as well as important macroeconomic data
important to planning. It would initiate the process of ascertaining from the people at
lower tiers of government their perception of the problems to be solved during a
particular planning period. Similarly, the office of the Deputy Governor would supervise
planning at the state level as well as cooperate with the Federal Planning Institution in
ascertaining from people living in local governments what they consider the most
pressing needs/problems to be addressed by economic planning. At the local government
level, the office of the Vice Chairman would organise surveys to ascertain the people’s
perception of social and economic problems. It is only after these problems/needs have
been collated and passed on to the federal authorities that the latter would start its
planning process and outline priorities based on what the people desire, not what
bureaucrats decide in their air-conditioned offices located in faraway offices in capital
cities. The function of federal and state planning agencies would be largely coordinating
as well as carrying out technical and macroeconomic studies that would suggest projects
to be carried out in the public sector, and identifying investment packages to be
undertaken by the formal private sector and informal sector in an effort to meet the needs
identified by the people.
The so-called informal sector would take on added importance in the new system.
Institutions considered as belonging to the informal sector include community based
organizations, cooperatives, market women organizations, religious organizations
engaged in social and economic development, and Non-Governmental Organizations
(NGOs) providing relevant technological support to these organisations. Emphasis is
placed on the informal sector because the majority of the people are engaged in it, it has

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the potential of eventually dominating the economy; and because there is no guarantee
that projects and programmes executed by public sector institutions and the organised
private sector would meaningfully address the most pressing needs of the people.
Political expediency and the profit motive may overrule the needs of the people.
We shall now pay attention to the modalities of planning at Local Government Areas, in
private sector organisations, and by community based organisations.
1. Local Government economic Planning
Each Local Government would develop its plan following guidelines provided by the
state government. The plan would provide for development of local infrastructure such as
markets, primary and adult schools, small-scale water supply and alternative energy
projects The Local Government would, in addition, pass on to local investors
technological and investment ideas received from the State Government.
2. The Private Sector
In a globalised economy, planning in the private sector (formal as well as informal)
would attain an importance greater than that attached to the public sector. This is so
because the private sector is the arena where goods and services are produced. Planning
in this sector should as much as possible follow the strategic planning approach. The
overall mission of the private sector organisation would be to provide some product or
service at competitive prices to customers at home and abroad. Its main objective would
be survival in a highly competitive global market. Its prospects for survival would depend
significantly on its understanding of the economic, political, technologic at as well as
international environment within which it operates, and its preparedness to exploit
profitable opportunities that come its way. Its business strategy should include capacity
building in terms of technology and manpower development, and utilising the most up-
to-date Information and Communication Technology in its operations. In its
implementation of its plan, the private sector enterprise should set specific and quantified
goals in terms of market share, level of production, work force, breakthroughs in export
markets. Enterprises should therefore be in a position to aggregate their plans for a plan

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period and to compare performance against plan targets. Where performance falls short
of targets, governments at state and federal levels may be approach to introduce policies
to stimulate private sector production.
5.0 Conclusion
Chairman, distinguished ladies and gentlemen, as I approach the end of my contribution,
I cannot resist the temptation of drawing attention to a recent development in the
discipline of economics, Some two or three decades ago national economic planning was
largely considered a domestic economic matter while the closest ideas to globalisation
were regional integration and periodic Rounds of GATT negotiations to reduce
restrictions on trade in goods, ideas then analysed within the sub-discipline of
international economics. Now, it would be suicidal to undertake national economic
planning without taking into Consideration developments in a rapidly globalising world.
Similarly, it would be absurd to discuss globalisation in isolation of rapid technological
innovations taking place in individual economies.
Professor Aboyade was a shrewdly realistic economist. If he were alive today, I am
almost sure that he would have invited his professional colleagues to discuss and agree on
a more realistic economic policy framework. The hypothetical meeting would have made
a professionally competent case for the return of national economic planning, a rejection
of extremist free-market economics, a significant restoration of the value of the naira, the
use of subsidies in critical areas of national life, and capacity building as the foundation
on which an internationally competitive national economy rests. But would professional
economists attend that hypothetical meeting? I am confident that they would have
honoured an invitation from Professor Aboyade to brainstorm on economic problems
under the aegis of the Development Policy Centre. However, if such an invitation were to
come from a public sector organisation, all reputable professional economist would turn
it down. The reasons for such a reaction are obvious:- the deafness of previous Nigerian
governments to explicit predictions of the disastrous consequences of SAP, the apparent

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