Shifting the Base of Nigeria's Mono-Product Economy by Adeyeye Eyitayo

In 1958, Nigeria  joined the league of oil producing states in the world. Thereafter, production of crude oil became the major source of government  revenue with average production of 2.5million barrels daily. The economy of Nigeria has since then been moulded around  proceeds from crude oil to maintain about 65 -70% of  government revenue. It generates about 90 per cent of the country's foreign exchange earnings. Thus, the  discovery and production  of oil  pushed agriculture, the traditional mainstay of the economy, right from the early fifties  to the backstage. Alas, Nigeria neglected agriculture because of overnight money gotten from crude oil.

Several years down the line, the oil market  has suffered notable  setbacks, to wit, fall in oil price, fluctuating demand,poor regulatory regime and other market phenomena. It is safe to say that the instability  of oil price has been persistent  for a long while. Recently, the US Energy information Administration (EIA), recorded that Crude oil prices were generally lower in 2018 than in 2019. But with the outbreak of corona virus in 2020, the price of oil hit its lowest level in 17 years, declining from $59 to $28 per barrel within a month. As it stands presently, oil companies globally can no longer produce in full capacity. Nigeria is currently trading below the Federal Government's  benchmark in the oil market. Oil vessels are floating on the sea with no buyer, supply is now more than demand.

It is a public knowledge that the outbreak of Covid19 is such that is crumbling  economies of the world and Nigeria  is not an exception. As a matter of reality, the mono-product economy of Nigeria even makes it worse. Since the spread of the pandemic in Nigeria, the Government  has become restless and short of revenue options. The stay-at-home orders imposed by the government is leading the economy on a slippery-slope as informal businesses and companies have been shut down for weeks. Meanwhile, the most recent estimate puts Nigeria's  debt profile at N33 Trillion, still likely to worsen amid the steep decline in revenue associated with falling oil prices. Foreign Investors are now reluctant to hold naira-dominated assets as Naira would not stop falling against the dollar like the wall of Jericho. It was recorded that the  Nigerian Stock Exchange (NSE) lost ₦2.3 trillion in two weeks after Nigeria's index case. Little wonder the Federal Government had to cut down the 2020 budget from N10.594 trillion to N10.276 trillion.

The failure to diversify the economy  of Nigeria  will forever be a serious indictment on successive governments. It is the major reason why the economy remains so fragile and vulnerable to changes in external conditions, especially oil price fluctuations. Each of the past governments  deserves to be blamed for this. Nigeria is  endowed with several mineral resources and to think that her economy hinges solely on crude oil simply embarrasses logic. Given the present realities, diversifying Nigeria's mono-product economy is the only express way out of the looming recession. Creating several avenues and channels  of income generation for the government  is now a matter of national emergency and not just mere campaign manifesto. It is time, if not before now, to focus on mining and  agriculture. Needful to say that, through agriculture, the three necessities of life – food, clothing and shelter – are made available to man. China, Netherlands and USA remain the  largest producers and exporters of agricultural produce in the world. The truth is, demand for agricultural produce is much stable in the world market, given the ever increasing population of the world. There is a dire need for expand in production to meet this global demand.

 

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Nigeria is Africa's leading consumer of rice, one of the largest producers of rice in the continent and simultaneously one of the largest rice importers in the world. Nigeria ranks the largest producer of cassava in the world, with cassava production of up to 20% of the world. Nigeria also boasts of large scale cultivation of cocoa, peanuts, cotton, palm oil, corn, sorghum, millet,yams, rubber, just to mention a few.

 

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I strongly believe with purposeful  leadership, Nigeria can become the food basket of the world. We have the capacity, we have the population, we have all the resources that is required, which is the human capital and that is  the best that is needed. Only by so doing we can become an economic powerhouse in the coming years.



Adeyeye Eyitayo is a public interests enthusiast and lawyer. You can reach him at [email protected]