Shifting the Base of Nigeria’s Mono-Product Economy -By Adeyeye Eyitayo

In the year 1958, Nigeria joined the league of oil-producing states in the world. Thereafter, the production of crude oil became the major source of government revenue with an average production of 2.5million barrels daily. The economy of Nigeria has since then been molded around proceeds from crude oil to maintain about 65 -70% of government revenue. It generates about 90 percent 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 prices 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 coronavirus 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 public knowledge that the outbreak of Covid19 is such that it 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 are 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 expressway 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 expansion in production to meet this global demand.

Nigeria is the continent’s leading consumer of rice, one of the largest producers of rice in Africa 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.

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 are 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.

Eyitayo is a public interests enthusiast and an aspirant to the Bar.

Email -: eyitayoifeoluwa496@gmail.com