Nigeria’s Economy And Diversification Option Manasseh F. Paul-Worika
Nigeria’s economic diversification initiative has been more about political pronouncements than real efforts to not only broaden the base of the country’s resources, but raise the volume of output and revenue of course, diversification has become imperative, given that the nation’s offerings at the international market are commodity-based, without significant value addition and subject to several shocks.
Deputy Director, African Department of the International Monetary Fund (IMF), Mr. Mark Plant said, “running an economy only on oil does not work. A diversified economy, coupled with prudent management of budget will set any nation on track towards experiencing economic growth”.
Nigeria has witnessed the devastating consequences of ignoring the necessity of diversification. In the last two years, if has not been the same compared to nearly three decades, as commodity crises-induced recession brought the economy to standstill. Till date, it is still “fragile”.
The age-long diversification story has become resounding in the vocabulary of any government, with officials making it a daily discourse, once the fortunes of the major foreign exchange earner; crude oil, begin to tatter. Fortunately or not, the commodity has always been the rescues, but government will again relax and relapse to the “usual”.
Nigerian-born Dr. Philip Emeagwali; according BrainyQuote, once said, “Nigeria is a West African nation of over 100 million energetic people. It is endowed with lots of natural resources, but lacks human resources”.
Indeed, the observed lack of human resources is not about certificates, degrees and exposure, but may well include the obvious death of self and political will and ingenuity, needed to transcend any seeming impossibility.
With the long history of military regimes, Nigeria experienced only devastation in the development of non-oil economy. This has resulted (and Keeps resulting today) in law standard of living, a huge division between rural and urban areas, and excess economical imbalance.
The country has a big issue with developing the multi-sector economy. Nigeria is rich in natural resources that can make it happen.
Unfortunately, we’ve not seen government with a strong will power to invest part of the revenue brought by the oil sector into solving the problem of poverty, growing agriculture, and other sectors.
After independence in 1960, Nigeria had agriculture as its main source of income. With the exportation of cocoa, cotton, rubber, palm oil and groundnut to other counties of the world, the nation’s economy was “self-sufficient” and balanced. No one heard about negative payment balance, the economy was rising, factories here working, different regions were developing and unemployment level was drastically low.
The oil boom changed everything. The economy’s trajectory quickly switched to selling crude oil and spending all the revenue instead of investing proceeds into growing different economic spheres.
At the advent of democracy in 1999, Obasanjo’s first full national budget in 2000 was under 600bilion naira but now we have as much as 800% increase over this, yet we can only sees little development but surplus of preaching’s and governance by billboards while vision 20-2020 is in a state of rest like Newton’s first law of thermodynamics.
As a matter of priority, Nigeria government must encourage the diversification of Nigeria’s economy. It is the only viable way to survive the current environment of global economic uncertainty with the volatility of oil price. It is crucial that government do not believe that oil provides an endless source of revenue.
Diversification presents the most competitive and strategic option for Nigeria in light of her development challenges and given her background. Diversification has a lot benefits for Nigeria to maximally utilize her abundant resource-base to re-build the economy and enjoy the benefits of all the linkages, synergy, economics of scale, grow national technology and foreign investment profile, build human capital, exploit new opportunities, lessen averagely operational costs, increase national competitiveness and grow the standard of living and confidence of the citizens for national renaissance.
Diversification does not occur in a vacuum. And, the need to have in place an enabling environment to make diversification possible remains necessary.
A number of key drivers have already been identified. These, for example, include investment, trade and industrial policies, a dynamic growth performance, macroeconomic stability, a competitive exchange rate and expansionary but responsible fiscal policy as well as institutional variables such as good governance and absence of conflict and corruption.
Considering Nigeria’s peculiar circumstances and the successes recorded before the advent of oil, for Nigeria to break loose from the problems inherent in a mono-economy, especially are dominated by oil, which is subject to depletion, international price shocks and unfavourable quota arrangement, there is need for diversification.