Nigeria, once a beacon of hope for Africa, now finds itself mired in economic stagnation. A nation blessed with abundant natural resources, including fertile land and vast oil reserves, has failed to live up to its potential. Nigeria’s economy has deteriorated despite a bright beginning in the 1960s due to corruption, poor management, and an incapacitating reliance on oil earnings.
Yet today, Nigeria’s economic trajectory is vastly different. While China has achieved rapid industrialisation and emerged as the world’s second-largest economy, Nigeria lags behind, constrained by a GDP per capita that is a fraction of its former counterpart. Oil, once seen as Nigeria’s golden ticket to prosperity, has become the nation’s Achilles heel. Dependency on oil has limited the potential of other sectors and left Nigeria vulnerable to price volatility, cyclical recessions, and declining industrial output. Now, as global demand shifts toward a post-oil future, Nigeria faces a crucial decision: adapt or risk further economic stagnation.
“The nation’s leadership has largely failed to adopt the cohesive industrial policy that underpins sustained economic growth in other emerging economies.”
Nigeria’s overreliance on oil revenue has stunted the development of manufacturing, agriculture, and other sectors that could have broadened the economic base. Unlike China, which used its early economic policies to bolster manufacturing and industrial exports, Nigeria poured its efforts into exploiting crude oil—a path that yielded short-term gains at the expense of long-term stability. As oil profits flowed in, traditional industries dwindled. By the early 2000s, Nigeria’s manufacturing sector, once a pillar of employment, was reeling. Thousands of companies shuttered their doors, leading to job losses, reduced exports, and a weakening domestic supply chain.
A recent report from the Lagos State Employment Trust Fund highlights how oil revenue eclipsed industries such as textiles and cement, which, at their peak, could have fueled a robust industrial economy. Without a diversified economy, Nigeria became more vulnerable to swings in oil prices and unable to build the infrastructure necessary for sustained industrial growth.
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Repeated efforts to diversify have lacked the continuity and vision required to make meaningful change. Policies like the Nigerian Enterprises Promotion Decrees in the 1970s were aimed at fostering local ownership and reducing foreign influence, yet without basic infrastructure—such as consistent electricity and efficient transport networks—these policies ultimately fell short. Limited by inadequate power and transportation, Nigeria’s industries struggled to scale or compete on a global level.
The nation’s leadership has largely failed to adopt the cohesive industrial policy that underpins sustained economic growth in other emerging economies. China’s success stems from targeted investments, export-oriented policies, and the creation of Special Economic Zones. Nigeria, in contrast, remains stuck in the trap of oil dependence, leaving other sectors overlooked and underdeveloped.
China’s economic transformation offers valuable lessons. Through careful investment in manufacturing, infrastructure, and foreign trade, China turned its potential into prosperity. While Nigeria cannot replicate China’s exact path, certain principles are relevant: the importance of diversifying exports, fostering a pro-business climate, and investing in physical and digital infrastructure. Nigeria’s leadership must see beyond oil and embrace the kind of strategic planning that develops agriculture, technology, and light industry to absorb the country’s growing labour force.
Nigeria’s recent Purchasing Managers’ Index (PMI) of 50.2—an indicator of economic expansion—is a faint sign of hope, driven by growth in the services and agricultural sectors. But without deeper reforms in manufacturing and energy, such progress will remain modest and vulnerable.
This moment is pivotal. With global energy markets shifting and Nigeria’s oil-based economy losing viability, the government must act decisively. Comprehensive economic reforms are essential, beginning with policy measures to boost industrial productivity, encourage foreign investment, and modernise infrastructure. This includes creating incentives for innovation, promoting efficiency, and prioritising transparency in governance to rebuild investor confidence.
As Nigeria’s economy reaches a critical juncture, the opportunity to transform from resource dependency to a diversified, resilient economy is within reach. But this shift requires a disciplined approach and sustained commitment to policy reforms. The journey will be challenging, but for Nigeria, the alternative—a prolonged period of economic stagnation—is far less attractive.
To achieve this transformation, Nigeria must prioritize investing in sectors such as agriculture, technology, and manufacturing to reduce reliance on oil. Additionally, building robust infrastructure, including roads, railways, and ports, is crucial to facilitate trade and economic activity. Investing in education and training to equip the workforce with the skills needed to thrive in a knowledge-based economy is also essential. Promoting transparency, accountability, and the rule of law to attract investment and foster economic growth is paramount.
By taking these steps, Nigeria can unlock its full potential and build a prosperous future for its people. The time for action is now.
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