Can Nigeria Look Beyond Oil?

According to a 2016 report by PwC, Nigeria’s economy might advance through the world rankings to the top 10 in 2050, overtaking Germany, the United Kingdom, France, and Saudi Arabia, with a projected GDP of over $6 trillion. But only if Abuja quickly moves away from its reliance on oil.

Despite accounting for only roughly 9% of Nigeria’s GDP in 2021, oil has a significant impact on the country’s economy. In 2020, oil sales accounted for one-third of the government’s budget revenue and about 90% of the country’s export revenues. In 2021, the country produced 1.7 million barrels per day, down from 2 million the year before.

According to experts, Africa’s top oil producer must now consider a future that is less reliant on crude oil. Nigeria’s largest drivers of growth are services, which will account for 46 percent of the country’s GDP in 2020, followed by industry (28.22 percent) and agriculture (24 percent ).

The sectors, however, have not yet realized their full potential due to underinvestment. Africa’s most populous country will go to the polls next year well aware that oil would not guarantee long-term prosperity or a resilient economy.

Price dilemma

When the price of crude oil falls below government expectations, the federal budget suffers. The coronavirus epidemic has exacerbated a problem that has been in Nigeria for at least a decade.

Nigeria’s oil income were roughly 65 percent lower than expected in the first half of 2020 due to a drop in global oil prices at the start of the pandemic, resulting in a major budget shortfall.

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Consequentially, lower oil sales mean less money in circulation, making it difficult for Nigerian firms to purchase the raw materials or components they require.

The concerns around fossill fuel

According to Taiwo Oyaniran, associate director of the global consulting firm PwC in Nigeria, there are further reasons why the country of 206 million people should lessen its reliance on oil and gas. Nigeria’s oil reserves would eventually be depleted, necessitating the development of other sectors of the economy.

“What is happening globally is that a lot of countries are moving away from fossil fuels like crude oil as a source of energy, and they are moving towards clean energy. So it is quite important for us to consider other sources of revenue generation as a country”

– Taiwo Oyaniran, associate director of the global consulting firm PwC in Nigeria

Agriculture, ICT, and creative industries, such as the burgeoning music and Nollywood film industries, are all being promoted as possible export options in Nigeria.

Agriculture the golden key

Agriculture was the backbone of Nigeria’s economy before to the discovery of oil in the 1950s.

Among the crops indicated as prospective export earners are palm oil, cocoa beans, sesame seeds, and cashew nuts.

Nigeria used to be the world’s biggest exporter of palm oil, a key ingredient in many processed goods around the world.

According to Tokunbo Afikuyomi, a UK-based economist who writes for the Nigerian financial publication Stears Business, agricultural employs half of Nigeria’s workforce, therefore “there is a school of thought that it’s practically impossible to build the economy, do any exports, or do any output without agriculture.”

Source: AfricaNews | DW News