Economic Realities of Nigeria: A Brief Introspection
Analyst View

Questions! Many questions are asked when you think, speak or write about Nigeria in its different eras. However, one question that has transcended through all these eras is: where exactly are we headed? Some say “we will be great someday”, while others barely see light at the end of the tunnel. Unsurprisingly, both views can be taken to the bank and honestly, it is sometimes hard to take a position given the potentials embedded in the Nation and the striking possibility of “nothing changing”. Nonetheless, we endeavor to provide some data and facts to inform a position. 


Firstly, Demography. Since 1960, Nigeria has grown to be the 7th most populated country in the world. Hence, population is simply exploding and -in the case of Nigeria- it does not seem too good. The UN projects that at current rate, the nation’s population will double by 2050. *Sighs* That’s a lot!


Unlike China, Nigeria has been unable to use its population to propel its growth. Do you know what has happened with Nigeria’s population? It has been impoverished. It is simply pathetic that Nigeria has the highest number of poor people in the world. Should we also add how uneducated the populace is?


With a population as large as ours, one would expect economic activities (GDP) to reach at least US$500billion. Data from World Bank shows that of the top 10 most populated countries in the world, only Nigeria (US$397 billion), Pakistan (US$312billion) and Bangladesh (US$274 billion) have a GDP below US$1trillion. Nonetheless, Nigeria retains its title as the “Giant of Africa” as it has the largest economy on the continent although closely followed by South Africa with a GDP of US$366billion. While Nigeria ranks 30th in the world by GDP ranking, high population places the country’s rank at 141st in the world in terms of GDP per capita.


We can pull out a series of data ranging from government revenue per capita (N37,403p.a) and budget per capita (N45,263p.a) to oil revenue per capita (N27,278p.a) and oil reserves per capita (0.19barrel) and we will come at one singular conclusion: Population is just too large and of no visible benefits.


If we look at education, we will likely draw the same conclusion. As at the end of 2017, some 60million Nigerians were illiterates according to Mr. Adamu Adamu, Former Minister of Education. This number excludes the 11million out-of-school children roaming the streets and hawking for their families as a daily hustle. It is hard to envision how Nigeria will achieve any development aspirations without checking the high level of illiteracy.


However, there is an upside to the population debacle and we believe if exploited by the government could be of great benefit to the economy at large. The upside is that the country is relatively young with a median age of 18.3years. Furthermore, 62.26% of the total population falls under the category of 24years and below. This means a lot! With a forward-thinking government, the right policies, enabling environment, education, access to finance and infrastructure, the Nigeria population will work wonders. 


However, who can assure that these needed factors will be put in place? Is it not better to adopt a one or two-child policy or any other equally effective policy for the next couple of years to check population growth? Furthermore, does the government have enough funds to provide basic amenities that will be sufficient for the increased population?


Anyway, we do not want to dive into discussions about how tribal and ethnic diversity has affected our unity as a people. Quantitatively, it may have not been proven but qualitatively, it is widely accepted that we fall when we are divided and we are stronger united.


The Government and its Policies

This is probably the single, most generally accepted cause of most problems faced in the country today. Where do we even start? Is it the cost of governance or the misplaced priorities in some of its policies? Should we start from corruption or the seemingly lackadaisical attitude towards following through on development policies? How about starting from the over-dependence on oil or the white elephant projects lying inactive in various corners of the Nation? … The list is inexhaustible!


In the very early days of Nigeria, agriculture sector was the mainstay of the economy. It remains an important part of our history as Nigeria was famous for the export of cocoa, groundnut and palm kernel oil. Considerable measures to advance the agricultural sector in the colonial period (1861-1960) and early years of the post-colonial era seemed to have propelled the Nation to achieve self-sufficiency in food. However, the pride of the nation was soon neglected and replaced following the oil boom in the 1970s and Agriculture began a downward trend. Till this day, the nation is yet to re-attain self-sufficiency in feeding itself. While the share of agriculture to GDP has declined over the years and population growth between 2-3% p.a., agriculture export has dropped drastically and domestic demand is supported by food import. One will barely remember that agriculture was the major basis of the “green” in the Nigeria flag. 


While the discovery of oil in itself was meant to be a blessing, the handling and management of this resource by the government has somewhat made it otherwise. One cannot stress enough about the potential benefits of diversification. The agricultural and natural resources have always been there, laying in plain sight waiting to be tapped; however, the government has not done enough to exploit the resources/opportunities buried beneath this 923,763 km² land. 


One will be correct to say that even the oil sector, which has been sort of a saving grace of the country, is not even being utilised to its full potential.  Regulations and policies in the oil sector lag behind international standards and the governmenthas continued to delay well-meaningpolicies for more than a decade. According to experts, the Petroleum Industry Bill (PIB) is capable of improving the fortunes of Nigeria oil sector but it continues to remain unimplemented for no real “justifiable” reason. This part beats us! 


Talk about the inappreciable state of refineries in the country and the irony of importing refined oil products despite the availability of crude oil. Talk about the payment of fuel subsidy that continues to eat up funds that could have been invested in socio-economic development projects, one would see how priorities have been misplaced over the years. It is worthy to note that it will also take several years to correct this. 


Talking about expenses that consume government funds, cost of governance probably sits at the top alongside subsidies. These funds could have been invested in developmental projects relating to health, education or security. The well-discussed topic surrounding this issue is the salary and allowances of Nigerian lawmakers. A lawmaker is entitled to a hardship allowance! This makes us wonder what is harder between being a legislator or an average Nigerian. But we do not want to go that route, instead let’s shed a little light on how Nigeria could have solved its duplicity and multiplicity of MDA’s, which has contributed significantly to the high cost of governance.


In 2011, precisely August 2011, President Goodluck Jonathan inaugurated a Committee on the Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies to prune the rising cost of governance in Nigeria. The committee, which was headed by former Head of Service of the Federation, Stephen Oronsaye, completed its task and submitted its report in 2012, precisely April 2012. 


Afterward, a White Paper Drafting Committee was set up to study the findings of the submitted report. The drafted White Paper was completed in another two years, March 2014. Yes, there is a White paper that details thoroughly how government can cut cost! Here is a link to the report


A cursory look at the report shows that the committee recommended a reduction of statutory agencies from 263 to 161, with additional proposals that: 38 agencies are to be abolished; 52 be merged and 14 others be reverted to departments in various ministries.


While the production of the White paper led to the creation of another committee charged with its implementation, nothing has been done 5 years after. This development is nothing but a clear demonstration of lackadaisical attitude towards implementing policies that can impact positively on the economy.


This reminds us of when former CBN governor Lamido Sanusi, at one Annual Capital Market Committee, said that, “at the moment, 70% of the Federal Government’s revenue goes for payment of salaries and entitlement of civil servants, leaving 30% for development of 167 million Nigerians. That means that for every naira government earns, 70 kobo is consumed by civil servants


With all that being said, the aim here is not to state all the negatives without touching on some positives that may define years ahead. Let’s talk about natural resources.


Nigeria is blessed with numerous resources and it is exhaustive to make a list of them all. However, the following paragraphs are expert’s opinions on how valuable some of these resources/corresponding sectors are. We will do well to add links for further read.


Seasoned maritime lawyer, Senior Advocate of Nigeria (SAN) and former President of Nigeria Bar Association, Olisa Agbakoba is of the opinion that Nigeria’s maritime sector has huge untapped revenue estimated at N7 trillion per annum. Some stakeholders have also expressed a common opinion on how Nigeria is losing “several billions of Naira” on a regular basis to revenue leakages, capital flight and policy inconsistencies in the sector. 


Likewise, Nigeria stands to benefit from a developed solid minerals sector as evidenced in a 2007 World Bank Study. An excerpt from the report reads thus, “There would appear to be a substantial and widespread mineral endowment in the rocks of Nigeria, most of which is as yet untapped. Nigeria compares unfavourably with its sub-Saharan neighbours in respect of GDP and export value generated from solid minerals. The range is considerable from a high of over 40% of GDP in Botswana to less than 1% in Nigeria. Export earnings of over 50% were generated in Democratic Republic of Congo, Namibia, Botswana and Zambia and 12 other countries gained over 20% of export earnings from solid minerals in comparison to Nigeria’s 0.4%, during the same period”.


A recent audit of the Ajaokuta steel factory showed that just US$652million (roughly N200billion, if converted at the official rate of N306) is needed to complete the factory (currently 95.7% complete). We recall that the project was targeted at making Nigeria self-sufficient in steel, thereby kick-starting the country’s industrial development. If not for anything, one positive that can be considered is the fact that the project was expected to directly employ about 10,000 staff at the first phase of commissioning, the upstream and downstream industries that will evolve after its commission is expected to employ 500,000 employees.


We draw attention to the possible partnership between Nigeria and Russia, which is aimed at resuscitating the steel company. This is sort of a good news and we hope it is successful. Should this happen within the next few years (1-2years), alongside implementation of effective policies in that industry, we could be more certain as to where the Nation is heading.


Asides, mining and maritime sectors, Nigeria also stands to gain significant benefits from tourism. Tourism is one of Africa’s most promising sectors in terms of development. According to the World Tourism Organisation (UNWTO), Africa received 56 million international tourists in 2014,up from 26 million in 2000. International tourism receipts amount to US$ 36 billion or 7% of all exports in the continent. This is an indication that tourism in Africa is gradually gaining attraction in the global space and Nigeria can benefit from this.


Nigeria is one of the most culturally diverse nations of Africa, with various traditional events and landmarks, which could serve as an attraction to foreign tourists if well developed and marketed. The development of tourism In Nigeria can stimulate Nigeria’s socio-economic progress through job creation, export revenues from foreign tourists, infrastructure development as well as the preservation of cultural heritage and empowerment of marginalized people. 


There you have it, from Agriculture and Population, Mining and Oil, to Maritime and Tourism, there is indeed a great potential for Nigeria to be a formidable economy in the global space. However, before then, fundamental transfiguration must occur.