Lack of political will may delay the nation’s quest to achieve economic diversification.
This damning verdict is the outcome of a recent report authored by Zainab Usman, a Fellow of The Carnegie Endowment for International Peace.
In the report tagged, ‘Economic Diversification in Nigeria: The Politics of Building a Post-Oil Economy,’ Usman said Nigeria has for long been regarded as the poster child for the ‘curse’ of oil wealth. Yet despite this, the country achieved strong economic growth for over a decade in the 21st century, driven largely by policy reforms in non-oil sectors.
According to her, Nigeria’s major development challenge is not the ‘oil curse’, but rather one of achieving economic diversification beyond oil, subsistence agriculture, informal activities, and across its subnational entities.
Through analysis drawing on economic data, policy documents, and interviews, Usman argues that Nigeria’s challenge of economic diversification is situated within the political setting of an unstable distribution of power among individual, group, and institutional actors.
“Since the turn of the century, policymaking by successive Nigerian governments has, despite superficial partisan differences, been oriented towards short-term crisis management of macroeconomic stabilisation, restoring growth and selective public sector reforms. To diversify Nigeria’s economy, this book argues that successive governments must reorient towards a consistent focus on pro-productivity and pro-poor policies, alongside comprehensive civil service and security sector overhaul. These policy priorities, Nigeria’s ruling elites are belatedly acknowledging, are crucial to achieving economic transformation; a policy shift that requires a confrontation with the roots of perpetual political crisis, and an attempt to stabilise the balance of power towards equity and inclusion.”
Raising some posers, she queried, “If the Nigerian economy is not characterised by inertia and decline, what then are the challenges to its sustained growth and development?”
Pressed further, she said, “In this book, I identify economic diversification as Nigeria’s foremost economic development challenge. We can define “economic diversification” as sustained growth and the transition of an economy from dependence on primary activity such as oil and mineral extraction, and agriculture, to value addition in these activities. As I will explain in this book, this challenge of economic diversification is evident in aggregate national figures. Just one-tenth of Nigeria’s GDP comes from the oil sector, but more than 90% of its exports and 50% of government revenue comes from it.”
This dependence on oil revenues is also acute at the subnational level, she stressed, adding that “. Nigeria’s thirty-six states are mostly reliant on federal oil revenue transfers for their fiscal revenues even though these subnational economies predominantly comprise of non-oil activities in agriculture, trade, manufacturing, and services. As Africa’s largest oil producer and exporter, a major economic policy goal is to sustain non-oil growth and employment in other industries. Thus, identifying economic diversification as Nigeria’s main development challenge is not a profound statement.”