Nigeria’s economy beyond oil

In 2013, the World Bank stated that mono-product economies are vulnerable due to the volatility of global oil prices. Nigeria falls in the category of mono-economies having had 46 years of oil dependence with 95 percent of the goods it exports coming from oil. Almost as expected, in 2016, the country’s economy began to falter, with global oil prices having dropped since June 2014 in the international market from $114 to around $29 per barrel, with a continued fluctuation that has failed to return to the initial price.
In the 1970s, the discovery of oil in Nigeria was seen as an opportunity that would raise the country from being an ordinary Third World country to one with the promise of a developed one. Sadly, oil discovery has proven to be the dearth of attention to other sectors, particularly agriculture which earlier sustained the nation. Over the years, the sole dependency on oil has shown that it can only offer Nigeria illusive hope and the several other weaknesses of a mono-economy.
As it is, economic diversification is no longer an option. It has become a top priority for Nigeria to open up various sectors of its economy and decentralise its attention from crude oil economy! With ongoing issues of fluctuating oil prices, if Nigeria should continue to depend on one product, it might end up not only being unable to meet the basic social and infrastructural needs of its people, it might be thrown into deeper economic crisis. It is therefore a time to look beyond oil and into other sectors that can improve the country’s economy.
Actually, one of the highpoints of the 2016 budget made by the Buhari-led government was the expectation that it would formulate policies to stimulate the rapid diversification of the Nigerian economy with the development of agriculture, which was the mainstay of the economy before the discovery of oil. For the records, agriculture offered 70 percent of Nigeria’s teeming population job opportunities.
Despite the lack of attention, inconsistent, poorly conceived government policies which have bedevilled the sector over the years, agriculture has contributed immensely to the country’s GDP. In 2014, Nigeria’s food, beverages, and tobacco (FBT) industry contributed 13 percent or N4.2 trillion to the country’s gross domestic product. In the first three quarters of 2015, the major revenue-earners for the economy were given as food, beverage, and tobacco, which contributed N3.15bn.
One agricultural product which is capable of achieving more for the economy is tobacco. The sector which already contributes to the economy at this time needs to be opened up for a competitive market space. The creation of a competitive tobacco industry can help grow Nigeria’s economy. At the moment, African countries like Malawi and Zimbabwe earn a significant part of their GDP from tobacco alone. In Malawi, tobacco has been identified as a strong source contributing to the reduction of poverty levels in the country. Even the World Bank at a time mentioned that it is a positive strategic single crop that could change the livelihoods of many Malawians socially and economically. In 2015, tobacco contributed 11 percent to Zimbabwe’s GDP.
Enabling a competitive tobacco industry in Nigeria would not only stimulate growth but also provide a multiplier effect on the economy, because it would ensure a speedy industrialisation that would create employment much more than any other sector in the economy. Given that most tobacco farmers already practice agro-diversification (growing other crops along with tobacco), it can be said that it would also offer food and food security alongside the foreign exchange it would earn for the country. With the newly inaugurated National Tobacco Control Committee (NATCO) on board, there is no better time to encourage competition in strict adherence to the National Tobacco Control Act 2015.
The tobacco industry offers thousands of direct and indirect employment opportunities in Nigeria, offering full-scale local manufacturing and extending promises of bringing development to even more rural communities, with the British American Tobacco owning much of the market. Without competition in the tobacco sector from other investors, the Nigerian government currently earns N15bn ($91.2m) in tax revenues alone. In total, the federal government earns $364m. What this means is that opening up a competitive economy will ensure a partnership that can help the government achieve its obligation to its people, earn more, even where only 10 percent of the population use tobacco products. Diversifying the economy into agriculture and boosting a sector where tobacco plays a big part would help in the industrialisation of the country, and speed up Nigeria’s journey towards better socio-economic development.
In spite of the economic meltdown in the country, the tobacco industry has strong potentials to stimulate economic growth and development with technical skills, entrepreneurship, technology and foreign direct investments. There are also strong possibilities for the tobacco industry to boost GDP, taxation, as well as other economic variables, which explains why Nigeria should factor in the industry in its efforts at creating a viable economic growth that will improve the standard of living of Nigerians.

Amos Jinadu