Nigeria Beyond Oil, A Critical Look At Nigeria Fiscal Policy And The Untapped Wealth Sectors -By Adeyemo Noah A.

Nigeria being the largest economy in Africa with a GDP of US$477.38 billion in 2023 and ranked 31st of the major economy globally. It was projected that the economy could rise through the world rankings to top 10 in 2050 with a projected GDP of US$6.4 trillion, surpassing Germany, United Kingdom, France and Saudi Arabia. To achieve this however, diversification from the economic over dependence on crude oil is required.

The impact of covid19 on Nigeria economy since 2020
The consequence of the covid19 pandemic on Nigeria economy in 2020 can not be overlook. Overall, gross domestic product in 2020 fell from US$474.52 billion to US$432.20 billion. With a drop of 8.9 percent, the economy in Nigeria suffered some significant losses than other countries. , Because of occasional drop in crude production oil price suffered decline, the tourism sector alone slumped by around 78 percent. The unemployment rate rose from 5.2 to 6.0 percent. The country’s gross debt increased by 5.5 percent. The consumer inflation rate rose from 11.4 percent previously to 13.2 percent.

One of the key challenges facing Nigeria’s fiscal policy is its heavy dependence on oil revenue. According to the World Bank, oil accounts for about 90% of Nigeria’s total export revenue and over 70% of government revenue. This over reliance on a single commodity leaves the country exposed to external shocks, such as global oil price fluctuations, which can have severe implications on its economy,
as a result of Nigeria dependency on crude oil and navigating away from other natural resources any little drop in oil price at global market will automatically affect the country economy.

Nigeria, like many other oil-dependent countries, has long relied on revenue from it’s oil sector to drive economic growth and development. However, the volatility of oil prices and the global shift towards renewable energy sources have exposed the vulnerability of Nigeria’s economy. As a result of this there is an urgent need for the country to diversify it’s revenue sources and explore some untapped wealth sectors to ensure long term sustainability and growth.

To move beyond oil, Nigeria needs to implement bold and strategic fiscal policies that promote diversification and focus on other sectors with untapped potential. This could involve targeted investments in sectors such as agriculture, manufacturing, tourism, technology and many more.

Agriculture, for instance, holds immense potential for Nigeria’s economic growth. Nigeria has vast arable land and favorable climate conditions, making it wells suited for various agricultural activities.

It may interest you to know that for many years, agriculture has contributed more to Nigeria’s Gross Domestic Product (GDP) than petroleum, even though the latter accounts for about 80% of the country’s annual export earnings.

Between 2011 and 2012, agriculture contributed to over 40% of the nation’s GDP. In 2018, the agricultural sector contributed an estimated 25% to Nigeria’s total GDP, the most by any sector, while the oil sector contributed 8.6% over the same period, in 2019, the country’s GDP grew by 2.27 percent (from N69.80 trillion in 2018 to N71.39 trillion in 2019) and the growth was largely due to the contributions of the agricultural sector (N10.50 trillion), trade sector (N5.94 trillion) and the information and communication sector (N4.66 trillion), in 2020, the agricultural sector accounted for 24% of Nigeria’s GDP while the oil sector accounted for less than 9%. The contribution of the agricultural sector to the national GDP was 25.88% percent in 2021, while that of the oil sector remained under 10% (7.24%).

Without a doubt, agriculture has proven to be the most valuable contributor to Nigeria’s economic growth in recent times.

Statistics from reliable sources show that Agriculture has provided job opportunities for countless Nigerians over the years. According to the World Bank collection of development indicators, employment in Nigeria’s agricultural sector accounted for nearly 35% of total employment in 2019 and 2020.

In the late 2000s and early 2010s, agriculture reportedly accounted for over 40% of employment in Nigeria. Currently, over 70% of Nigerians engage in agriculture, but mainly at the subsistence level.

Many may wrongly assume that crop farming, animal husbandry and trading are the only career options in agriculture, but agriculture in Nigeria is slowly evolving into a lucrative field with the advent of agritech jobs that offer a wide range of career opportunities.

However, inadequate funding, lack of modern farming techniques, and poor infrastructure have hindered the sector’s growth. By investing in rural infrastructure, providing access to finance for smallholder farmers, and promoting modern farming techniques, Nigeria can significantly boost its agricultural productivity and export potential.

The manufacturing sector is another area that offers untapped wealth potential for Nigeria. Currently, Nigeria heavily relies on imports for the majority of its consumer goods, limiting its potential for domestic production and job creation. A strategic fiscal policy could focus on providing tax incentives and improved access to credit for local manufacturers, as well as investing in infrastructure and building a skilled workforce to support the growth of this sector.

Furthermore, Nigeria has immense tourism potential, with its rich cultural heritage, diverse landscapes, and wildlife reserves, domestic and international visitor spending in the Nigerian economy directly contributed US$2.6 billion to Nigerian GDP and supported a US$7.9 billion total impact including indirect and induced impacts. The Nigerian travel and tourism industry represented  4% of total GDP in 2019.
Despite this, the tourism sector remains largely untapped due to inadequate infrastructure, security concerns, and negative perceptions about the country. By implementing effective fiscal policies that prioritize infrastructure development, improve security, and promote Nigeria as an attractive tourist destination, the country can harness the economic benefits of this sector.

Lastly, Nigeria has a growing technology sector that holds immense potential for economic growth. With a large youthful population and a rising wave of entrepreneurship, the country has the talent and creativity to become a technology hub for Africa and stand among the top in the World. Fiscal policies that encourage investment in technology infrastructure, provide tax incentives for startups, and support research and development can help unlock the untapped potential of this sector.

Nigeria’s heavy dependence on oil revenue poses significant risks to its economic stability and growth. To mitigate these risks, the country needs to implement strategic fiscal policies that promote diversification and unlock the wealth potential of sectors such as agriculture, manufacturing, tourism, and technology. By focusing on these sectors, Nigeria can build a more resilient and sustainable economy that is less reliant on oil and better equipped to navigate the challenges of the future.