DIVERSIFYING NIGERIA’S ECONOMY BEYOND OIL
Over the years and shortly before independence and after independence, oil has been the major source of income and foreign exchange for Nigeria because of its dependent on single commodity for decades.
The Agricultural sectors which used to be the main stay of the economy in pre-colonial Nigeria, was relegated to the background, while the management of oil revenues proved to be ineffective in driving the economy to bring about the needed level of development as a result of corruption in the system.
This scenario has serious negative implications on the nation’s development calculus, as after over six decades of oil exploration activities in Nigeria, a good percentage of Nigerians still live in abject poverty. Unemployment today is double-digit and is up to 33% while productivity is at its lowest ebb. Given this scenario, there is urgent need to seek possible ways of diversifying the productive base of the Nigerian economy away from oil.
Analysts have observed that Nigeria’s peculiar circumstances and based on the successes recorded before the advent of oil, that for Nigeria to break even from the problems inherent in a monotype-economy, especially one that largely dominated by oil, which is subject to depletion, international price shocks and unfavourable quota arrangement, there was the need for diversification.
Three sectors, agriculture, tourism and technology and innovations, are possible options for diversifying the Nigerian economy. Drawing from the implications of a study conducted recently, the improvement of hybrid species; both plants and animals, provision of complementary inputs, and direct involvement of government in the business of agriculture; and scaling up funds voted for tourism, relaxing the stiff conditionality associated with acquisition of tourism visa, and using state-of-the-art facilities at all tourism sites, for tourism as well as funding technological development, will go a long way in improving the revenue base of the country and improve the Per Capital income of the Nation.
Nigeria without doubts is the largest economy in Africa with over 478 billion dollars Gross Domestic Product and one of the fastest growing economies in the world with a long term average growth of 7.7%. As the world’s 7th most populous country, Nigeria is home to about 200 million people and is Africa’s largest market, with a vibrant and innovative young population that would explode into the biggest hub for trade in the world if properly developed.
Since mid- 2014, the prices of oil have been fluctuating owing to excess supply, low demand or crisis in major oil producing countries such as the one being experienced now between Russia and Ukraine leading to unstable revenues for the country.
To boost the economy, diversification of the economic dependence on crude oil needs to be addressed without further delay as Nigeria’s intrinsic potential lies in other sectors beyond oil. For instance, the technology and digital sector holds great potentials for the growth of the economy. Little wonder therefore, that the Buhari Administration in Nigeria created ministry of Communication Digital Economy to tap the revenues accruable from that sector.
Similarly, Agriculture is another key sector that will not only improve the economy, but will provide food security and provide jobs for the teeming unemployed youth in the country. If properly developed, the Agricultural sector will not only provide jobs but will give Nigeria needed foreign exchange and feed the Nation.
Forward linkages to agro processing and other services such as logistics as well as
backward integration to input supply sectors could improve farm incomes, increase employment and improve domestic food security. Potentially, Nigeria’s global agriculture exports could take off at a rate similar to Brazil with 59 billion dollars in export revenues by 2030. The value added to oil and gas output needs to urgently improve by implementing diversification within the sector. This requires investments across the downstream sector to develop petrochemicals, fertilizers, methanol and refining.
The Tourism Sub- Sector is one area that is grossly underutilized due to lack of deliberate policies aimed at attracting tourists couple with some security concerns in some of the tourists’ sites. With the tourism potentials in Nigeria, all that is needed is to tap into it as another source of foreign exchange earner.
Above all, there is the need for the economic and regulatory environment to be more conducive for business by simplifying complex regulation and processes as well as eliminating the hurdles that stand in the way of a bigger and more productive private sector growth and investment in Nigeria.