Military regimes which opted for a private enterprise economy in general have had little success in developing their countries either because of local economic factors (like Ghana's over-reliance on cocoa) or the personalize factor of a semi-literate dictator being in power and a resulting lack of commitment to development. Nigeria is a not be exception to this negative trend among capitalist military regimes in Africa: a country whose economy has grown and where economic growth has resulted from the presence of vast oil wealth and a determination by the military rulers to make Nigeria 'Africa's economic giant'.

The period from 1966 to 1970 was a period of political disorder and disunity in Nigeria; the military regime could not properly embark upon economic expansion until the end of the Civil War. By the end of the war, Gowon's 12-state structure had completely changed the national political atmosphere. The old fears of northern or southern domination were out of date and so were the confrontations in the old regions between minority and majority ethnic communities. The twelve new states were twelve new centres of development, progress and challenge. General Gowon's magnanimity and clemency towards the Ibo secessionists was a key factor in political unity and economic expansion.

There were no trials of secessionists; some were appointed commissioners in the Federal Government with important portfolios like Economic Development, Trade and Industry, and Finance; the University of Nsukka was reconstituted with many of its former staff; by 1972 Ibo civil servants were being appointed to work in the North; increasing revenues from oil production made possible rapid economic recovery in the war-damaged areas.

Nigeria's economic expansion after the Civil War was financed almost entirely by Nigerian resources, principally from oil revenue. The Second National Development Plan (1970-4) was followed by the Third (1975-80), which provided for total expenditure of N32 billion or around N500 per Nigerian.

In both Plans priority was given to agricultural development and provision was made for developing forest resources and fisheries, improving telecommunications and transport by road, rail and air, expanding education at all levels to meet the nation's need for skilled manpower, and increasing water and electricity especially in less-developed areas, as well as expansion of industry, whether extractive, manufacturing or construction.

Manufacturing industry was to concentrate on heavy industries like iron and steel, vehicle assembly, cement, and pulp and paper. From the point of view of social progress the important aspect of the Plans was Universal Primary Education (UPE), which was implemented before the return to civilian rule, and the continuing expansion in the number of secondary schools, teacher training colleges and universities.

The ten-fold increase in planned investment in the Third Development Plan was almost entirely the result of the trebling of the price of crude oil following the meetings of the OPEC countries in late 1973. The value of Nigeria's oil exports rose immediately from N2 billion to N5.5 billion. The Nigerian government was able to ensure use of oil revenues for Nigerian development only after establishing closer control over the international oil companies. The J 972 agreements gave the government 55 per cent of the companies profits. In 1973 the government took a 35 per cent share of the ownership of Shell/BP, increasing this to 55 percent in 1974, when similar shares were taken in other companies. These shares were held for the Nigerian Government by the Nigerian National Oil Corporation, which by 1975 was also producing its own oil.

In spite of the economic boom there was a downturn in the economy in the late 1970s. By 1976 imports had risen high enough for Nigeria to register a current account deficit. In 1977 the trade imbalance was even bigger because of lower oil exports and an even higher level of imports.

Oil production began to fall in the middle of 1977 and in 1977-8 there was a drop of 40 per cent in oil revenue, because of lower demand for Nigerian oil as new supplies of low sulphur crude oil, similar to Nigeria's, were coming on stream in the North Sea (Britain) and Alaska (USA). Moreover, poor growth rates among Western consumption reduced the demand for oil; and a poor pricing policy hit Nigeria worse ', than, say, Algeria and Libya. Another reason for the downturn in Nigeria's economy was poor performance in agriculture, with stagnant or declining productivity in virtually all-major food or export crops, causing Nigeria to import more and more food.

The reasons for the poor performance in agriculture were:
agricultural labour rates were less competitive in an oil-boom economy; the drift of young people to the towns for new industrial, service and administrative jobs; crop and animal disease and drought; poor producer prices; and a lack of trained extension workers to educate farmers.

The downturn of the economy made austerity measures necessary.

There were sharp cuts in public expenditure by both the Federal Government and the government of the (now) Instates. Many Third Development Plan projects were dropped. The Federal Government even found it necessary to borrow a Eurocurrency loan worth a billion dollars and follow that up with a World Bank loan.

Fortunately, oil output picked up again from the middle of 1978 and in 1979 oil revenues, assisted also by a further price rise, amounted to N9 billion per annum. Preliminary steps would be taken to boost agricultural production, in the form of incentives to farmers, but not much was done until the return to civilian rule and the introduction of President Shagari's 'Green devolution', designed to raise crop production and make Nigeria self-sufficient in basic foodstuffs and other essential commodities such as groundnuts and cotton.
Captured and imprisoned Biafran officers and men were released.

And the federal government re-employed many Ibos. All were forgiven, and war memories were put aside. Oil revenues escalated especially after the 1973 Middle-East War— and oil became Nigeria's number-one export, bringing in much wealth.
The 12-state structure did much to erode ethnic feelings.

In 1971, Gowon was promoted to General. And in 1973/4, he served as the Chairman of the Organization of African Unity (OAU).

Nigeria's oil-based economic boom in the 1970s resulted in a big expansion in industry and in transport facilities and social services including education, ft failed to benefit agriculture. It also failed to raise the general level of prosperity of the Nigerian people. Wealth failed to 'trickle down' in sufficient quantities. The beneficiaries were a small elite of professionals, businessmen, civil servants and military officers. Income inequalities continued to increase rapidly.

Low-salaried officials found rises in food prices and rents outstripping their inadequate and rare salary increases. The unemployed urban population found it even harder to make ends meet, and there was an understandable increase in violent armed robbery in the cities.