The Nigerian economy has grossly underperformed courtesy of the COVID19 pandemic and the slump in crude oil price and demand. There are contradiction, uncertainties, evidence and eminence of economic recession hovering over us.
A look at her enormous resource endowment showed that Nigeria is the 6th largest gas reserves and the 8th largest crude oil reserves in the world. It is endowed in commercial quantities with about 37 solid mineral types and has a population of over 200 million people. Yet economic performance has been rather weak and does not reflect these endowments, even before the advent of COVID19 and the current shock on global crude oil price. Compared her with the emerging Asian countries, notably, Thailand, Malaysia, China, India and Indonesia that were far behind Nigeria in terms of GDP per capita in 1970, these countries have transformed their economies and are not only miles ahead of Nigeria, but are also major players on the global economic arena.
Successive governments in Nigeria have since independence in 1960, pursued the goal of structural changes without much success. The growth dynamics have been propelled by the existence and exploitation of natural resources and primary products. Initially, the agricultural sector, driven by the demand for food and cash crops production was at the centre of the growth process, contributing 54.7 per cent to the GDP during the 1960s.
However, the second decade of independence saw the emergence of the oil industry as the main driver of growth. Since then, the economy has mainly gyrated with the boom burst cycles of the oil industry.
With a National budget (government income and expenditure) outlay that is dependent on oil revenues has more or less dictated the pace of economic growth and development.
Looking back, it is clear that the economy has not actually performed to its full potential particularly in the face of its rising population. In general, economic growth and population growth rates are very close that the margin cannot induce the required structural transformation and economic diversification.
Furthermore, Nigeria’s poor economic performance, particularly in the last Sixty years, is better illustrated when compared with China. For instance in the 1970s, while Nigeria had a GDP per capita of US$233.35 and was ranked 88th in the world, China was ranked 114th with a GDP per capita of US$111.82. Today, China is almost occupying an enviable number one position as productive, performing and developed economy in the world.
The major factors accounting for the relative decline of the Nigeria’s economic fortunes are easily identifiable as political instability, lack of focused and visionary leadership, economic mismanagement and corruption.
Prolonged period of military rule for example stifled economic and social progress, particularly in the three decades of 1970s to 1990s. During these years, resources were plundered, social values were debased, and unemployment rose astronomically with concomitant increase in crime rate.
Living standards fell so low, to the extent that some of the best brains with the requisite skills to drive the developmental process left in droves to other nations, and are now making substantial contributions to the economic success of their host countries.
However, since 1999, the country returned to the path of civil democratic governance and has sustained uninterrupted democratic rule for a period of 22 years. This in itself is a great achievement and gives reason for hope in a country that has was burdened with almost three decades of military rule and dictatorship. It has provided an opportunity to arrest the decline of the past and provide the launch pad for the take-off into an era of sustainable and all-round economic development.
However, in this regards also the successive civilian administrations since 1999 have committed to tackling the daunting challenges but with little and abysmal results to show. What we have is economic growth risen substantially, with annual average of 7.4 per cent, but the growth has not been inclusive, broad-based, jobless growth and devoid of transformational development.
The implication of this trend is that economic growth in Nigeria has not resulted in the desired structural changes that would make manufacturing industry the engine of growth, create employment, promote technological development and take millions out-off poverty. Available data has put the national poverty level at 74.4 per cent. Similarly, there has been rising unemployment with the current level put at 30.7 per cent by the National Bureau of Statistics (NBS, 2020).Furthermore, the country lags behind her peers in most human development indicators.
What must be done for a post COVID19 Nigeria economy stability? An understanding of Nigeria’s economic aspirations today has remained that of altering the structure of production and consumption patterns, diversifying the economic base and reducing dependence on oil. Secondly, the government must aim of putting the economy on a part of sustainable, all-inclusive and non-inflationary growth with the 2.3 trillion stimulus package in the kitting and avoiding the wastage of that is critical.
Thirdly, a policy link through research and development is a boost to the manufacturing sector is the key to a revamp and industrialize economy (industrial sector comprises the manufacturing, mining, agriculture and electricity generation, oil and gas), implication of this is that while rapid growth in output, as measured by the real Gross Domestic Product (GDP), is important, the transformation of the various sectors (education, entertainment, media, banking and finance) of the economy are even more vital with the manufacturing leading the way.
As well as manufacturing sub-sector that is made up of large, medium and small enterprises, as well as cottage and hand-craft unit. This is consistent with the growth aspirations of most developing countries, as the structure of the economy is expected to change as growth progresses.
By: Adefolarin A. Olamilekan,
Political Economist and Development Researcher.