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Summary: Since the discovery of crude oil in Nigeria in 1956, there has been a significant shift from an agrarian economy that was generating the major chunk of revenues for the economy to an oil-based economy. As a result of this economic diversion, revenues from oil products have over the time remained Nigeria’s major source of economic development. The over-reliance on oil revenue has consequently led to misappropriation of funds, corruption, and even critical is the current recession caused by a global crash in oil price. To address the later problem, there is a need for Nigeria to adopt a diversified economy.
Since the discovery of oil in the late 50s, oil products remained the primary export and the lifeline to the Nigeria’s economic growth. Other export products such as Rubber, Cocoa, Palm oil, Ground nut and other farm produces that used to be the country’s economic mainstay had started to declined; the focus had turned squarely on petroleum products. This has been the genesis of the most of the predicaments we found ourselves; a product that ought to be a blessing to us has become something else; though it contributed to the nation’s infrastructural development as a result of huge revenues generated however, it degraded or declined the agricultural production which was the main source of income not to the government but the populace. Corruption, embezzlement and mismanagement of public funds have become the order of the day. Many citizens have turned us to laziness due to easy money is coming.
A critical look at the following statistics, one will understand the extent of our over reliance on oil product and how the reliance bbrought us to the current economic situation we find ourselves today. According to the World bank, in 2014, top exports of Nigeria are: Crude Petroleum ($74B), Petroleum Gas ($13.2B), Refined Petroleum ($4.23B), Pyrotechnic Alloys ($1.9B) and Special Purpose Ships ($1.25B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($7.83B), Cars ($1.75B), Wheat ($1.46B), Motorcycles ($877M) and Iron Structures ($780M). TOTAL amount of our exports in 2014: $99.7B in which total from oil estimates ($91.43B), making petroleum 92.2% of our total export. Does this mean Nigeria will broke without oil? The answer is obviously yes. It’s not a rocket science, being Nigeria, a mono economy has resulted us to the sordid and sorrow situation we found ourselves.
Whenever there is a shortfall in terms of quantity of oil production, like the present one which was as a result of the activities of Niger Delta Avengers, or a shortfall in terms of dwindling price of the product, may be due to the market forces or international politics, the consequences to our economy will always be a devastating one. It’s obvious our dependency on oil which its price has now crashed was the main cause of this so-called economic recess. This has popped up other problems key among which are; reduction in government revenue, decrease in Foreign reserves and increase in FOREX demand due to over reliance on import goods which also caused the devaluation of our local currencies. Inflation rate and rising cost of commodities, couples with the massive looting of our treasury by successive governments leave Nigeria vulnerable to current economic crisis.
Unless and until Nigeria diversify its economy especially, through agriculture, mines and manufacturing industry as well as ICT, we will continue to suffer and be at the receiving end whenever the international community decides to crash the price of oil product at the international market. But we have to understand that diversification is a process which will take some times before it manifest, all we need to do now is to put structures on ground for the real take-off. The crisis in itself might be a blessing in disguise and should be an eye opener for us as a nation to be more productive rather than sitting down looking for easy money which its era has gone as lamented by Mr. President. With the strong policies, measures and structures, accountability, fairness, transparency and judicious use of government funds, we will certainly get out of this crisis.
God bless Nigeria!
Key Recommendations: While considering diversification as a strategy to ease the recession, there is a need for a productive and sustainable diversification with special attention towards improving the agriculture, mining, manufacturing industry as well as the ICT.
About the Author: Sanusi Moyi is an anti-money laundering expert. He writes from Abuja.
Keywords: Nigeria, Diversification, Corruption, Petroleum, Agriculture
