The Urgency of Nigeria’s Economic Diversification

In 2012, Nigeria became the second African country to be listed on JP Morgan’s emerging market bond index and quickly became the biggest economy in Africa after surpassing South Africa with a GDP of $509.9 billion in 2013. Establishing itself as the second fastest-growing key emerging economy after China in 2014, with crude oil at an all-time high of $107.64 a barrel, words get out, economists and investors across the world renewed their interests in the Nigerian economy, a nation of over 170 million people and growth rate of 7.4 percent.

However, all these were short-lived as global oil prices plunges, with Nigeria generating 53 percent of her revenue from crude oil and 93 percent of her foreign revenue. The economic dip, Naira, Nigerian currency had to be devalued three times as Nigerian foreign reserve can no longer sustain fix rate of 155 naira to a US dollar, exhibiting characteristics of the first phase of economic recession, it became conspicuous that the nation that was once a global destination for investments needs a more sustainable economic policy with a long-term strategy.

Diversification

The ongoing discussion between the US and Iran has further proven that Nigeria can no longer exist as a mono-crude oil economy but as a multi-diversified economy. The research conducted by Bloomberg shows that global oil supply would increase in 2016, when Iran’s oil is expected to hit the global market and forces oil prices below the current level, in fact, analysts forecasted $20 a barrel for crude oil in 2016. If the Nigerian economy is struggling this much at $45 a barrel the state of the economy is better imagined when the crude oil price hit $20 a barrel.

The data released by the National Bureau of Statistics (NBS) shows that the Agricultural sector employed 70 percent of the Nigerian labour market, which comprises mainly the youth. The service industry is currently the fastest-growing sector with manufacturing as the frontier, if Nigeria as a nation would overcome its current economic route there is a need for urgent economic diversification across all sectors.

The research conducted by Maria Uzonwanne of the Department of Economics, Nnamdi Azikiwe University shows that “there exists a positive relationship between economic growth in Nigeria and diversification of other sectors because, when there was proper management of human resources, huge investment and concentration on agriculture, the Nigerian economy was recorded to be healthy and vibrant”, which means effective diversification strategy with proper management of manpower and government investment will not merely resuscitate Nigerian economy but also enables Nigeria to feed her growing population and subsequently eradicate poverty and create jobs.

Nigeria’s unemployed graduates are expected to increase by 24.33 percent in 2020, which means there would be more unemployed graduates by 2020 if nothing is done now, British Council.