Can Nigeria Become Africa’s Largest Economy Without Oil?
Definitely! Nigeria has the capability—with its abundant human resources and institutional framework—to become the largest economy in Africa without relying on oil. What is missing is the commitment and strategic intent to replicate successful economic models from around the world.
Emulating Asian Economic Models
Following the economic development models of Asia, where global brands like Toyota, Sony, Samsung, LG, and Hyundai achieved prominence, Nigeria can establish itself as a leader in various economic sectors. The success in Asia was driven by well-defined industrial policies, strong policy drivers, and a robust institutional framework established by governments. Nigeria already has these institutions in place, and all that is needed now is a clear policy roadmap and stringent implementation.
The Power of Strategic Intent
The distractions caused by the petroleum industry divert attention from value-adding sectors. For instance, while the petroleum industry accounts for nearly 90% of foreign exchange earnings, its contribution to the Gross Domestic Product (GDP) is less than 10%. There is significant potential in the financial sector. Nigeria's Central Bank has consistently driven reforms, making the financial sector one of the strongest on the continent.
Capitalizing on Value-Adding Sectors
The informal sector is vast and underreported, with the Small and Medium-Sized Enterprise (SME) sector contributing between 48% and 54% of Nigeria's GDP and employing 84% of the workforce. The telecommunications, banking, and retail sectors are thriving, making Nigeria the largest smartphone market in Africa. However, these sectors can be further optimized to reduce dependency on imports and enhance local productivity.
Unleashing the Agricultural Potential
Agriculture plays a crucial role in Nigeria's economy, contributing over 21% of the GDP. However, its potential is significantly underexplored. Only 34 million hectares of the available 82 million hectares of arable land are cultivated. Agriculture is dominated by crop production, which accounts for 90% of the output, while fishery, forestry, and livestock together account for just 10%. Efforts are underway to increase value across the agricultural value chain, particularly focusing on the rice and cassava value chains.
Strengthening the Manufacturing Sector
The manufacturing sector, which accounts for almost 26% of GDP, faces challenges such as a lack of industrial policy, power supply, and long-term financing. Manufacturing can be significantly boosted, especially in high-demand areas like automobiles, IT, and fashion. Nigeria has established nine vehicle assembly plants, which can satisfy its public transport needs. However, the government must support local brands to compete globally.
Unlocking the Potential in Other Sectors
The government has taken steps to promote growth in other sectors, such as the beverages, toiletries, and mortgage industries. For instance, textile imports have been restricted to boost local production, and there are plans to invest in the leather and maritime sectors, which have significant untapped potential.
Conclusion
Crude oil and petrodollars provide an illusion of grandeur but obscure the potential of other sectors. A comprehensive industrial policy and its implementation are crucial to capitalize on Nigeria's strength in key non-oil sectors.