AN ASSESSMENT OF NIGERIA- UNITED STATES ECONOMIC RELATIONS (1960-2014)

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CHAPTER ONE
1.1.BACKGROUND TO THE STUDY
States in actual fact cannot exists in isolation, hence, once a state has been granted the full
status of statehood by the colonial authorities it has the legal right to engage in relations both
bilaterally and multilaterally on the international scene. With the country‘s independence, such
state can now be declared a sovereign state. Nigeria gained its independence from Britain on
October 1, 1960 and as such acquired the right to conduct its external relations with the rest of
the world. But the reality of Nigeria‘s independence was that it was a poor state and there arose a
need to create an avenue for relations with other countries of the world, both in Europe, Asia and
North America such as the United States of America. The history of Nigeria and United States of
America‘s formal relations is recent, but in consideration of the slave trade period, the relations
have been estimated to have started as way back as the 18th century. Nigeria was a major supplier
of slaves to the European countries especially Britain, which further traded some of these slaves
to the United States. The trade in slaves led to the first informal contact between the two
countries.
History has it that the coastal region of modern day Nigeria was referred to as the Slave
Coast. Nonetheless formal relations between the two countries started after Nigeria‘s
independence in 1960. According to one of the speeches given by the first Prime Minister Lt
Alhaji Abubarkar Tafawa Balewa at Nigeria‘s independence, Nigeria needs to acquaint it self
with the rest of the world to improve the country‘s overall status. The relations between Nigeria
and the United States of America officially started when the President of United States of
America, President Eisenhower was represented by Governor Nelson Rockefeller of New York
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at Nigeria’s independence ceremonies on October 1, 1960. That visit marked the beginning of
diplomatic relations (Ayam, 2008). The first diplomatic envoy of the United States in Nigeria
was on September 23, 1960 and since then relations between the two countries have continued to
blossom especially in the economic sphere. Relations between Nigeria and the United States
have historically been marked by cooperation, a degree of affinity and setbacks.
In the decades after independence, Nigerian governments defined a pragmatic stance in
continental and global affairs. In the 1960s and 1970s, Nigeria maintained cordial diplomatic and
economic relations with the United States, while maintaining non- alignment stance during the
Cold War. The political relations between the two countries have had some setbacks especially
during the Nigeria‘s military era. It is important to note that US is the champion of democracy in
the world and has continued to raise its voice against authoritarian rules in the world. The United
States had at various times during the years of military dictatorship in Nigeria spoken out against
tyranny and oppression and has consistently supported every effort at democratization (Nwokolo,
2011). For example, seven years after the Nigerian independence, the country was thrown into a
situation of Civil War. In the process of the War, the Nigerian government sought external
assistance. Britain supplied a huge amount of weaponry to the Nigerian government because of
its desire to preserve the country it created. United States on the other hand declared neutrality to
the war. According to U.S. Secretary Of State Dean Rusk, America was not in a position to take
actions as Nigeria is an area under British influence. The Federal Government turned to the
Soviet Union for military assistance during this period, as it was abandoned by the West. This
lead to a huge strain in their political relations as Nigeria felt betrayed by the United States.
However, economic relations continued to blossom, major American oil firms and other
companies were rapidly expanding their activities in the country, and Nigeria saw United States
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as a model for its economic development. General Babangida‘s commitment to democratization,
and his cooperation with multilateral financial institutions on economic reform, helped to keep
relations on a cooperative footing for much of his tenure.
During the Abacha regime there were issues of political instability and assassinations of
important members of the society which copulated into sanctions from United States and other
countries of the world. Nigeria was suspended from the Commonwealth, and the United States
joined several other countries in extending sanctions on travel, aid, and (non energy) trade.
Despite an increasingly confrontational political relationship, however, major American oil firms
continued to operate normally, even expanding investments in areas such as energy sector.
Relations between Nigeria and the United States normalized quickly after Abacha‘s death. His
successor, General Abdulsalami Abubakar, relaxed political restrictions, freed political prisoners,
and elaborated a scheme for transition to Civil Rule. The United States opened dialogue with
General Abubakar. Elections were later held in February 1999 and Olusegun Obasanjo came into
power, and was inaugurated on May 29. In addition to regularizing diplomatic relations, the
United States lifted visa restrictions on Nigerian officials, rescinded limits on aid and trade, and
ended the embargo on military cooperation. It is important to state that Nigeria has been one of
the most important trading partners of the US in Africa. Being the most populous country in
Africa, and endowed with natural resources such as oil ensured U.S.A.‘s attraction to the
country, in addition to its democratization process.
As a result of Nigeria‘s return to civilian rule foreign assistance from the United States grew
rapidly, from less than US$7 million in 1998 to US$109 million by 2001. This represented a
sudden increase in virtually all areas, notably democracy and governance, economic policy
reform, health, education, and infrastructure. With the support of the United States, Nigeria was
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able to resume borrowing from the World Bank, and the government concluded a new
arrangement with the IMF in August 2000. The USAID was extended to Nigeria to assist Nigeria
in various areas of need. The United States Agency for International Development (USAID)
supports programs in strengthening economic management and coordination, encourages private
sector development and economic reform, improves agricultural technology, marketing, small
scale and macro enterprise development and helps reap the benefits of African Growth and
Opportunity Act (AGOA). African Development Opportunity Act which was signed into law on
the 18th of May 2000 was established to offer incentives for African countries to continue their
efforts to open their economies and build free markets (U.S. Department of State, 2013). 41
countries including Nigeria enjoy the benefit of AGOA.
It was created for the purpose of assisting the economies of Sub- Saharan Africa and to
improve relations between the United States and the African region (AGOA, 2015). In addition
to economic benefits, health assistance focusing on HIV/AIDS, nutrition, and immunization,
education, transportation and energy infrastructure, are United States priorities for bilateral
assistance (Ojiako, 2010). The United States obviously has an interest in cooperating with
sympathetic leaders in large, troubled democracies, and there is no necessary contradiction
between these high politics and broader interactions between nations. Yet the United States has
too often banked on particular leaders in crisis-ridden states. An important challenge for
American policy toward poorly performing states is to identify elite groups, elements of civil
society, and leading public institutions that can serve as agents of stabilization and reform, and to
build a diverse array of linkages with these sectors. Nigeria presents significant opportunities in
this area, as there is a history of involvement by American nongovernmental organizations,
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business groups, universities, and an array of government institutions that can serve as a basis for
diversified engagement.
1.2.STATEMENT OF PROBLEM
The economic relationship between Nigeria and United States of America has reached new
heights in recent times. Extant literature claim that the relationship bodes well for both countries.
For example, Robert (1991) claimed that although political relationship during the period of
1975 was bad, economic relations continued to flourish. This economic relations has constituted
a mega change in both countries‘ political economy and has opened up new phases in their
relations. Ayam (2008) claimed that regardless of the political discord that Nigeria and United
States were going through, there were still cordial economic relations. This is because,
America‘s high level of development, technology and wealth, remain a source of assistance to
Nigeria. In similar vein, the United States has benefited from friendly relations with Nigeria, that
is, it has benefitted from its natural resources and its large population. Other scholars like Lewis
(2006), Ayam (2008) and Abegunrin (2001) and so on have looked at the nature of the
relationship at a particular point of history and they have argued that the relationship is more in
favour of United States than Nigeria. Omotere (2013) talked mainly about relationship between
Nigeria and United States during Muhamadu/Obasanjo regime. Lewis (2000) analyzed economic
relations between these two countries during the Nigerian Military era. The main reason for
relations is because states cannot on their own achieve their national interest.
This study will however be examining the economic relations between Nigeria and United
States from the 1960 to 2014.

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1.3.OBJECTIVES
The aim of this project is to assess the economic relations between Nigeria and the United
States. The specific objectives of the study are
 To identify the major areas of economic relations between the two countries
 To assess the nature and pattern of U.S. and Nigeria‘s economic relations
 To examine the impact of this relationship on Nigeria‘s economic development
1.4.RESEARCH QUESTIONS
 What are the areas of economic relations between US and Nigeria?
 What is the nature and pattern of Nigeria- U.S. economic relations?
 What is the implication of Nigeria- U.S. economic relations on Nigeria‘s economic
development?
1.5.RESEARCH
Some research hypotheses were viewed in relation to the research topic. These assumptions
include:
H1: The nature and pattern of Nigeria‘s relationship with the United States support the
assumption that both states operate on an equal basis. This means that their relationship has lead
to improvement in both countries since the beginning of their relations.
H0: The nature and pattern of Nigeria‘s relationship with the United States does not support the
assumption that both states operate on an equal basis. This means that their relationship has not
lead to improvement in both countries since the beginning of their relations.
1.6.SIGNIFICANCE OF THE STUDY
Bearing in mind the existing relationship between Nigeria and United States of America over
the years, this study seeks to enlighten the students and scholars of international relations about
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the nature of their economic relations. First and foremost, researchers and students of
international relations would gain more from the study as it would enrich their knowledge and
understanding of the subject matter. Also the Ministries in charge of foreign relations between
United States of America and Nigeria would find this a useful guide in expanding their economic
relations and how to extend other areas of their relations. This study will also aid Nigerian
foreign policy makers to make better policies to achieve a sound and more stable relationship
with United States, and other countries of the world.
1.7.SCOPE OF THE STUDY
This project will examine the economic relations between Nigeria and United States. Even
though other areas such as political, military and socio- cultural relations will be examined to
consolidate data, the study will focus mainly on Nigeria – U.S.A economic relations from 1960
to 2014.
1.8.LIMITATION OF THE STUDY
This study is bound to witness certain limitations, which has to do mainly with getting
complete and up to date trade data between the two countries.
1.9.DEFINITION OF TERMS
Relations: the manner in which two things may be associated. It is the connection and or link
between two bodies.
Economy: the state of a country or area in terms of the production and consumption of goods
and services and the supply of money.
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Trade: the business given to a commercial establishment by its customers. Also, it is a particular
instance of buying and selling.
Investment: to spend money time or energy into something, especially for some benefit or
purpose.
1.10. ORGANIZATION OF THE STUDY
This project is made up of five (5) chapters. Chapter one which is the introduction is made up
of the statement of problem, objectives, research questions, significance of the study, scope and
limitations. Chapter two contains the literature review and theoretical frameworks. Chapter three
includes the methodology of the research which is made up of the case study, instrument of
research (for data collection), method of data collection, population of study, sample size and
research design. Chapter four contains the data presentation, discussions and analysis. Lastly,
Chapter five consists of the summary of findings, conclusion and recommendation.