Advanced economies have one thing in common — Gross Domestic Product (GDP) fed by diversified revenue streams.
Like tributaries that nurture a river, the diversified product portfolios of such nations contribute to their GDPs with increasing levels of export structure complexities.
And since the essence of diversification is to reduce the risk of “one bad apple ruining the entire basket,” such revenue architecture sustains economic stability in uncertain times in a globalized economy.
As an outlier to most diversified resource-rich nations, Nigeria operates a monolithic economy — 90 percent of its foreign exchange is funded from oil earnings.
Such unhedged exposure to externalities can disrupt this “unique” revenue source with grievous economic outcomes. A vivid reminder is Venezuela’s current peacetime economic crisis. It validates the fact that living on a knife-edge oil-dependency is not a sustainable strategy.
Call it petrodollars laziness, Dutch disease or whatever label economists fancy, Nigeria’s export structure has not seen any appreciable change since the 1970s.
The culprit is the recalcitrance of past administrations to break an incestuous circle — immediate consumption of crude oil export earnings by an oversized acquired-taste imports, yearly. So, while Norway celebrates $1.5 trillion USD in savings from oil revenue, Nigeria celebrates a modest $2.3billion.
Assuming the present administration opts to depart from the parroting of the diversification singsong as was common to previous governments, what export baskets would be targets for development sprints to move the needle in diversifying revenue streams?
It would be wise to take a cue from nations that found enviable economic success by abandoning an unworkable export product mix; some target-industries were erroneously selected for development because of their seeming low-hanging fruits and regional competitive advantage.
A case in point is South Korea which changed its export product mix from labour-intensive textiles to electronics and machinery in the early 1970s and transformed its economy into the tenth largest in the world with a GDP of almost $2 trillion USD dollars!
In other words, it makes long term economic sense to be contrarian in picking product portfolio mix and increase investment in those sectors that may not conform to well-known models but hold greater promise of transformational economic complexity down the road.
In the past four decades, Nigeria focused its diversification efforts rounding up the usual suspects of agriculture, tourism, and solid minerals, with poor results.
Less attention is splashed on sectors like the blue or digital economies speciously perceived to be less “juicy” even as Nigerian artists and actors continue to dominate the world stage of global film and music industry — a sector whose market size grew to $319.12 billion in 2022 which is more than 66% of Nigeria’s entire 2022 GDP of 477.4 billion U.S. dollars.
Or Technology. Lured by easy lucre, thousands of jobless tech-savvy youths are knee-deep in online crimes, swamping law enforcement agencies and the courts with arrests and prosecution.
Yet, this crime-punishment fiasco offers little benefits. A better option would be a social intervention program or problem-solving justice, to save and funnel at-risk youths into workforce development programs targeted at the digital economy, such as the $200 billion video gaming industry.
For an administration that has taken bold steps in its first few months, including recognising the blue economy potentials, pivoting investment in the digital economy including film, music, video, and mobile gaming industries would be visionary. Here is one sector that continues to whisper aloud its untapped potential to become a major contributor to the country’s GDP.
To be clear, the heavy lifting for Nigeria music and film brand awareness is fait accompli. Currently, the global music scene is agog with Afrobeat popularized by such Nigerian superstar artists like David Adeleke aka Davido, Damini Ogulu aka Burna Boy, Ayodeji Balogun aka Wizkid, Divine Ikubor aka Rema, and others. Likewise, Nollywood – the Nigerian film industry, is the third-largest film industry globally with potential to deepen it multibillion-dollar purse even as it continues to single-handedly rebrand Nigeria’s image.
Globally, multitudes of aspiring actors, artists, and investors already believe that Nigeria has “something in the water” that makes people great. A city of global talents and investments is possible as Dubai is famous for shopping and more.
Government’s role is to build it out and tax it. So, what will it take to transform Nigeria’s blue or digital economies as well as agriculture, tourism, and solid minerals, into major contributors to its GDP?
Vision. It is the differentiator. Visionary leaders envision it, motivate, inspire, and harness resources; human and material, to achieve the desired outcomes.
And in a transformative manner: from the individual to the collective, a sense of shared responsibility and shared prosperity endures and nurtures patriotism.
Nigeria’s most boring singsong — diversification from crude oil into other sectors, has played for over forty years. It is past time to silence this broken record.