• Tuesday, July 23, 2024
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Nigeria’s oil-dependence straining economic growth, widening inequalities – AfDB

Oyeyinka-Oyelaran AFDB

Oyebanji Oyelaran-Oyeyinka, the senior special adviser to the president of African Development Bank (AfDB) has raised concerns that Nigeria’s continued dependence on oil revenues will make it vulnerable to economic shocks, exacerbating poverty and widening inequalities.

Speaking at the honorary symposium held in Lagos to celebrate the 70th birthday of Gboyega Fatimilehin, the co-founder of Diya, Fatimilehin & Co, Oyelaran-Oyeyinka said oil dependence has encouraged overconsumption during peak oil prices periods which has stunted the country’s economic growth.

Read also: AfDB inaugurates initiative to spur home-grown solutions to debt challenges

While delivering his lecture titled “The Paradox of a Rich Country and its Poor People: Reimagining a Prosperous Nigeria” the AfDB don stated that oil dependent economies are “externally dependent” and thus vulnerable to external price shocks.

“Nigeria’s oil dependence has severely reduced government incentives to develop institutional infrastructure for the regulation and taxation of non-oil sectors in the economy. This crippled fiscal capacity over time,” he said.

In his remarks, Oyelaran-Oyeyinka called for a diversified economy, especially one focused in the manufacturing and industrial sectors as they are necessary for rapid growth and development.

According to him, manufacturing comprises a significant source of demand for goods in other sectors including: banking, transport, infrastructure, insurance, and communication services.

“A strong manufacturing sector leads to a more diversified economy because of the plethora of forward and backward linkages in manufacturing production, and the necessity for inter and intra sector collaboration which also produces spillover effects.

“It can also provide demand for primary products and thereby stimulate growth in the agricultural sector,” he stated.

The former United Nations personnel further stated that Nigeria, which is expected to champion growth in sub-Saharan Africa, remains in enormous poverty, widening inequalities and opportunities.

The don said that inequality and poverty are the main sources of social tension and a powerful channel for social conflict and widespread mistrust between different groups.

“Poverty and inequalities are generated by path-dependent conditions and are sustained in large part by a set of factors related to asymmetric power distribution and wealth imbalances,” he said.

“Inequality is costly to economies and societies. It leads to lower growth, lower productivity and throws the economy into an inefficiency cycle,” the development economics and industrial policy professor said.

To combat poverty, Oyelaran-Oyeyinka asserted that Nigeria needs to tap into the agricultural value chain in order to subdue the rising food inflation ravaging the country.

He revealed that 65% of uncultivated arable land is now in Africa, underscoring the need for massive agricultural engagements.

“We’re 22 times more than the Netherlands yet it realised €130 billion last year from food products, almost four times all the crude oil exports from Nigeria,” the SSA said.

Also in his speech, Oyelaran-Oyeyinka stated that Nigeria is ranked very high in the index of state fragility due to its inability to provide basic services to the people.

“Nigeria ranks as a fragile state because it fails to deliver the most basic services to both the poor and rich alike,” he said.

Describing the celebrant, Oyelaran-Oyeyinka said Gboyega Fatimilehin is known for his humility and vision to create institutions that can help people generate wealth while elevating them out of poverty.

Many dignitaries as well as captains of industries were in attendance to celebrate one of the pioneers of estate surveyors and valuers in Nigeria, Gboyega Fatimilehin who turned 70.

Notable among the dignitaries were the former governor of Ondo State, Olusegun Mimiko and Oba Adedokun Abolarin, the Orangun of Oke Ila, Osun State, among others.