Judging an economy merely by its size can be highly misleading. To say that a country’s total yearly production alone suffices for its position in economic buoyancy and affluence among its global peers may be too assuming of what should be used as a standard of measure of actual economic strength.
Nigeria has been praised too many times as the giant of Africa. At the same time, however, the country is known to be home to several millions of poor individuals who struggle to survive daily. Suppose one was to judge Nigeria by her GDP alone. In that case, poverty should be an extreme incident found only among a sketchy few, as is the case of some developed nations like Sweden, Switzerland, the Netherlands, Germany or Finland, to mention a few.
Nigeria’s 2020 GDP of N152.32 trillion (over $400bn) could not stop over 83 million out of about 200 million Nigerians, who represent 40 percent of the total population, from living in poverty. Hence, with total production for 2020 valuing several trillion in US dollars, about half of the entire citizens of the country lived below $2 per day throughout that year.
Driving an economy productively, therefore, requires more than just the totalling of day-to-day activities at the major streets of Lagos, Abuja or Kano alone. Nigeria’s main economic drivers, which include activities in the agricultural, oil and gas, manufacturing and services sectors, respectively, if optimally explored, could help catapult the nation’s glory to the limelight. However, activities at these potential economic powerhouses remain largely uninspiring.
The oil and gas sector, for instance, is Nigeria’s mainstay as it fetches over 95 per cent of the country’s export earnings and about 40 percent of the government’s revenue, according to the International Monetary Fund (IMF). As the largest producer of oil and gas in Africa, oil activities contribute to about 9 percent of Nigeria’s GDP and total revenue from export activities accrued to this sector alone since the 1970s stands at $340 billion.
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As of today, Nigeria’s most important sector has been experiencing a shrinking in its activities. The recent global oil rally experienced has not yielded substantial gains for the country as the government’s undue fiscal indiscipline continues to crowd out potential gains from the market.
Consequently, the oil sector contribution to GDP, which bordered about 30 per cent in 2000, now contributes about 8 per cent. And yet, the country still heavily relies on oil activities to feed the nation.
The nation’s food basket is barely empty as the agricultural sector of Nigeria reeks of negligence and sovereign nonchalance. As the largest employer of the nation, employing about 35 million people, players in the agricultural scene are ill-motivated by the subsistence level of activities and worsened by current challenges in prime areas of the country that threaten food production and security in the entire country. Farmers are hungry, too scared to farm, especially in the insurgency-prone zones, and they lack access to credit facilities. As a result, agricultural activities in the country have sorely declined, and productivity in the sector has trended southwards.
Manufacturing in Nigeria has been sabotaged by several factors, including the scarcity of foreign exchange to purchase imports of raw materials.
Also, the country’s composition of imports primarily includes consumption goods that have no further value-adding advantage besides final consumption sales. In 2019, for instance, Nigeria’s manufacturing sector received over $8 billion in foreign exchange for imports. The bulk of this import comprises raw materials as well as household consumption goods.
With scarce FX, the cost of imports rises, making home-based production of final goods expensive. Hence, the sector continues to lose a competitive grip over foreign contenders for Nigeria’s large market, and the consequent contribution of the sector to GDP continues to decline.
The fast-paced services sector of the country is another area of a potential win for Nigeria. Currently praised as the most productive sector and contributing as high as 15 percent of GDP, the information and communications technology sector is a sunrise industry whose remarkable potentials are too visible to ignore if well explored.
However, Nigeria’s central authorities seem not to fully understand the contributing importance of this sector, particularly the role of a digital economy driven by social media influences to shore up national wealth for its digital-ready youth population.
The recent clampdown on a major social media handler by the government has shown how unready the country’s authorities are at welcoming more digital-based investments, which has been at the expense of Nigerians since the restrictive policy was announced.
Since then, many fintech companies and other investments have fled the shores of the country while other potential entrants chose to invest in neighbouring countries with lesser absorptive capacity for new investments when compared to Nigeria’s thus, leaving Nigeria’s digital space largely untapped.
To sum up, Nigeria’s main sectors whose capacity to drive real economic changes if properly engaged, are characterised as unproductive, waning in value-creation capabilities, uncompetitive and largely untapped.
