Many people today are unfamiliar with the term “Great Depression” and the profound significance it holds in global history. The Great Depression, which began in 1929 and lasted through the 1930s, was more than just an economic crisis. It was a period of financial collapse that affected millions worldwide. The Great Depression was a period of economic downturn in the history of the industrialised world lasting from the stock market crash from 1929-1939. It is otherwise regarded as the “roaring twenties.”
Prior to the Great Depression, the United States economy expanded rapidly, and the nation’s total wealth doubled between 1920 and 1929. This period was characterised by the stock exchange market, where everyone—the millionaires, tycoons, cooks, and janitors—poured their savings into stock. Hence, the stock market underwent rapid expansion, reaching its peak in August 1929.
The First World War and the Great Depression are intertwined, as these events had lasting impacts on the US economy. The US had initially adopted the policy of neutrality, but she was selling arms and ammunition to both sides. This was as the United States deemed it important to stabilise and expand her currency through the gold standard.
The Great Depression, although it had one of the most devastating economic crises in modern history, reshaped the global economy and left lasting lessons for countries worldwide. While many developed nations recovered over time, its effects indirectly shaped the socio-economic vulnerabilities of Third World countries like Nigeria. These remnants still linger in the form of dependency on exports, weak industrialisation, and systemic inequalities.
Although Nigeria was under British colonial rule during the Depression, the economic downturn influenced the colonial economy greatly, and to an extent, its impacts are felt to this day. As the global price of commodities crashed, Nigeria, an exporter of raw materials such as cocoa, palm oil, and groundnuts, suffered declines in revenue, laying the foundation for the fragile economic structure that persists to this day. Therefore, understanding the Great Depression is crucial for national development.
A closer look at Nigeria’s industrial development reveals the long shadow of the Great Depression. During colonial rule, industrialisation was actively discouraged in favour of raw material exports to feed British industries. This undermined local industrial growth, leaving Nigeria with weak manufacturing capacity. Decades later, the country continued to grapple with this issue. For example, despite being a major oil producer, Nigeria imports refined petroleum products due to insufficient refining capacity. This dependence on imports for value-added goods drains the economy’s potential revenue and underscores the lack of robust industries capable of driving sustainable growth.
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Income inequality and poverty are other remnants of the structural weaknesses exposed during the Great Depression. Globally, the Depression highlighted the dangers of unequal wealth distribution and the absence of safety nets for vulnerable populations. In Nigeria, these issues are deeply entrenched. Despite being Africa’s largest economy, millions of Nigerians live below the poverty line, while a small number of people enjoy immense wealth. Unemployment and underemployment are widespread, and government programs often fail to bridge the gap between the rich and the poor.
Nigeria’s financial systems also reflect challenges reminiscent of those observed during the Great Depression. The crisis exposed the risks of poorly regulated financial markets and inadequate access to credit for businesses and individuals. In Nigeria, today, many small and medium-sized enterprises (SMEs), which are vital for job creation and economic growth, lack access to financing. The banking system remains limited in reach, and financial literacy is low, preventing many Nigerians from participating fully in the economy. Strengthening the financial sector is critical for fostering inclusive economic growth.
While the remnants of the Great Depression reveal significant challenges, they also offer lessons that could help in boosting the economic stance of today. First off, there is the need to diversify the economy. Moving away from oil dependency and developing other sectors such as agriculture, manufacturing, and technology can create a more resilient economy. Nigeria has vast potential in these areas, but unlocking it requires targeted policies and investments.
Industrialisation is another crucial pathway to sustainable development. Building local industries that add value to raw materials can reduce the need for imports and create jobs. For instance, developing Nigeria’s refining capacity would not only save billions of dollars being expended on refined petroleum products but also boost employment opportunities and domestic production. Countries like Malaysia, which successfully transitioned from exporting raw materials to becoming a manufacturing hub, provide a model of emulation.
Finally, Nigeria and other Third World countries must rethink their role in the global economy. Advocating for fair trade policies and fostering regional trade partnerships can reduce dependence on volatile global markets. Initiatives like the African Continental Free Trade Agreement (AfCFTA) offer opportunities for Nigeria to strengthen its economy through regional collaboration.
Although the Great Depression may seem like a distant historical event, its lessons remain relevant for today’s realities. For Nigeria, these lessons highlight the importance of addressing structural vulnerabilities and building a more inclusive and diversified economy. The challenges are significant, but so too are the opportunities. By learning from history and embracing bold reforms, Nigeria can chart a path toward sustainable development, breaking free from the cycles of dependency and inequality that have hindered its progress for decades.
The enduring effects of the Great Depression are not just a reminder of past vulnerabilities; they are a call to action. For Nigeria, the time to act is now.
By Maryam Agbaje-Atoyebi (A leadership coach and public speaker).
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