'Economic Diversification in Nigeria in the face of dwindling Oil Revenue' - By Francis I. Ebeshi - NewzEmpire

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Tuesday, July 30, 2019

'Economic Diversification in Nigeria in the face of dwindling Oil Revenue' - By Francis I. Ebeshi


Abstract
There is no doubt that petroleum (crude oil) has contributed substantially to Nigerian revenue since its discovery in 1956 and more especially, since 1970 when its price was on the upward trend. However, it is a known fact across the globe that for a country to attain growth and development, its economy has to be diversified. 

Diversification does not occur in a vacuum. Mono-economy needs to give way to the productive development of various sectors of the economy. Following the supply and demand limitation of major importers from the country, which brought about the fall in the price of oil by more than 40% since June 2014 when it was $115 a barrel, which now is below $75, after five years of stability, it is a well-known fact that Nigeria's continuous large earnings or revenue from this sector will be impossible. As a matter of fact, there is an urgent need for the Nigerian government to begin looking into diversification of various sectors of the economy so as to attain solid economic growth. This paper however, attempted to seek out how diversification of the economy will enhance stable and viable economic growth in Nigeria. 

Keywords: Economic diversification, Oil Revenue, Agriculture, Human Resources Management 

Introduction 
A survey of the international scene of developing countries shows that governments of various Less Developed Countries (LDCs) have engaged in varieties of strategies and programmes in order to develop their economies and achieve sustainable growth.

These programmes are referred to, in economic parlance, as ‘instruments of national policy. They include the establishment of public organizations that take different legal and organizational structures, different managerial patterns and different sets of relationships with governments to understand and to review the different means by which they can achieve sustainable development in their countries with the limited resources at their disposal. The global financial and economic crisis has revealed Africa’s vulnerability to external economic shocks because of Africa's effort to meet the millennium development goals by 2015. Economic diversification which demands active participation in wide range of sectors, and firmly integrated into different regions, are better able to generate robust growth and great potential to increase Africa’s resilience and contribute to achieving and sustaining long economic growth and development in the continent. 

A strong growing sustainable economy is the goal of every nation in the world. However, scholars agree that economic development has been very slow on the African continent. Hyden (2006) notes: Despite its riches, African countries have not been very successful in wooing investors to the continent. A significant bottleneck for economic development in many countries of the region is its poor physical infrastructure. Essential services such as electric power, water, roads, railways, ports, and communications have been neglected, especially in the rural areas. 

The most important things to reiterate about the region’s economy are that it remains undeveloped and is becoming increasingly marginalized in a competitive global economy where other developing regions are making the fastest headway. Africa continues to rely on exporting primary commodities. It cannot generate enough investment capital from within and is largely failing to attract foreign investments. Without exaggerating, it is a well-known fact that Nigeria ranks among the most richly endowed nations of the world in terms of natural, mineral and human resources. Nigeria has a variety of both renewable and non-renewable resources, some of which have not yet been effectively tapped. Solar energy, probably the most extensive of the underutilized renewable resources, is likely to remain untapped for some time, and the vast reserves of natural gas produced with crude oil have yet to be fully utilized (Akpan, 2009 & Olumola, 2006). 

Before the discovery of oil in 1956 in Nigeria, Nigeria was famous in her agrarian economy through which cash crops like palm produce, cocoa, rubber, timber, ground nuts, were exported, thus making Nigeria a major exporter in that respect. Also, Nigeria had 19 million heads of cattle, the largest in Africa. At present, Nigeria is no longer a major producer of groundnuts (peanuts), rubber, and palm oil. Cocoa production, mostly from obsolete varieties and overage trees, has nevertheless increased from around 180,000 tons annually to 350,000 tons. Undoubtedly, the discovery of crude oil has contributed and assisted Nigeria's economic prosperity and growth. Nevertheless, the current dwindling in oil price since June 2014, after five years of oil windfall, has immensely affected the economy of major oil exporters like Nigeria, Saudi Arabia, Iraq and Libya, etc. as was majorly aggravated by Middle East unrest and wars. Another huge blow to crude oil exporters was America's reduction in the number of barrels they import from nations. These factors have created a bad market for Nigeria and thus, her economy is presently shaking.

This scenario is worsening by Nigeria's running mono-economic economy and the abandonment of agriculture. Thus today, agriculture has suffered from long years of neglect, mismanagement, inconsistent and poorly conceived government policies, lack of government meaningful incentive to farmers, lack of basic infrastructure and a lot of bureaucratic bottlenecks in executing policies and agricultural programmes among government agencies (Ariyo, 1997). This paper however, attempts to seek out how diversification of the economy will enhance stable and viable economic growth in Nigeria. 

Problem Statement 
A careful observer notices that the oil boom which would have been an enduring blessing to Nigeria has regrettably necessitated great shift of attention to oil money, which resulted to a total neglect of agriculture. The adverse effect of this boom and euphoria led to the establishment of new urban cities that necessitated mass exodus of able-bodied men and women from the rural areas to the cities in search of white-collar jobs and quick money. 

This development drastically reduced interest in agriculture and agrarian economy. Agricultural sector has been the leading provider of employment in Nigeria since the sixties and seventies, when the sector provided employment for more than 70 percent of the Nigerian population.

Unfortunately, in the wake of oil discovery, the attention on this sector of the economy was gradually and myopically shifted to the oil sector where employment opportunities were very low and the traditional agricultural exports have been on a progressive decline. Regrettably, the scenario has given rise to acute unemployment as oil sector could only employ limited number of the population and worse still, only experts. 

Recommendations 
Having seen the gross problem caused by the neglects of agriculture and poor human resource management in Nigeria, which have engendered the dwindling of the Nigerian economy, it becomes therefore, necessary to offer some recommendations that will be pivotal to the change of the status quo. 

1. Nigerian government, at all levels, should urgently create an enabling environment that will favour diversification of the economy that will de-emphasize mono-economy system and pay more attention to heterogeneous economy. 

2. There is an urgent need to establish a working and functional bank of agriculture or any micro finance bank that will be exclusively for farmers for easy access of soft loans. Government should create a special grant solely for genuine farmers. 

3. To make agriculture attractive, government should, as a matter of concern, put in place policies that will favour subsidy for agriculture. The implication is that government should incentivize farmers and subsidize their produce. 

4. Many farmers in Nigeria are still making use of crude and un-mechanized methods that favour low productivity. 

Therefore, there is an urgent need to introduce at all levels mechanized system of agriculture to increase productivity and to reduce strenuous human labour. 

5. Federal government should revive all the agricultural research institutes, school of agriculture, and reintroduce farm settlements and other river basin authorities to encourage massive production of agricultural produce. 

6. Government should endeavour to give scholarships to all those who are interested in studying agriculture to enhance human capital. 

7. Government should discourage politicizing implementation of agricultural projects, especially where some politicians hijack the system against the genuine farmers by creating unnecessary bureaucratic bottlenecks. 

8. Government should partner with media houses to promote agricultural programmes that will inculcate in the Nigerian youths the value and importance of agriculture. 

9. Government should introduce agricultural science as an obligatory subject in secondary schools and could offer first class students scholarship to universities to boost interest in agriculture. 

10. Government should endeavour to provide intermittently courses, capacity building, training and retraining in agriculture for professional development. 

11. Government should package programmes in agriculture to be attractive and have the political will to pay attractive salaries to workers. 

Conclusion 
From this presentation, a careful reader would observe that any government that runs a mono-economy is announcing her economic obituary. Therefore, the only thing that will save Nigeria from her economic crunch now or in future is the diversification of her economy with preference to the agricultural sector being the major employer of the Nigerian teeming population. Equally, government must have the political will to do the needful and develop a heterogeneous economy. The clarion call for diversification should not only be government's responsibility. Other stake holders must cooperate and collaborate with the government to make this dream come true. Lastly, if Nigeria diversifies her economy, I postulate that it will increase her Gross Domestic Product (GDP) and Internally Generated Revenue (IGR) for sustainable development.

Francis I. Ebeshi is a 400L Agric Student University of Abuja and a Co-founder of Youth Agricultural Initiative (YAI), faculty of Agriculture, University of Abuja-Nigeria.
Contacts:ebeshifrancis90@gmail.com/08163450688/08175637539


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