Nigeria's history, especially since independence in 1960, has been characterised by years of missed opportunities and the attendant shock on the economy.
Analysts said Nigerians are currently paying the price of the failure of successive administrations to take advantage of the immense opportunities that presented themselves at the dawn of Nigeria's independence from Britain in 1960.
Oil discovery has become Nigeria's developmental Achilles' heel. This is because more than six decades after independence and despite the huge human and natural resources available in the country, Nigeria remains one of the poorest countries in the world. The country has evolved into one of the least economically diversified countries because of her pathological dependence on oil export earnings.
Oil dependence is said to have led to the underdevelopment of manufacturing capacity for industrial exports, and export of processed agricultural goods. The oil sector has not significantly improved the well-being of Nigerians. Non-oil sectors lead to vastly more employment opportunities than the oil sector and their economic activities contributed approximately 93 per cent of GDP in 2020.
Unfortunately, despite the contributions of agricultural produce like cocoa, groundnut, and palm oil to Nigeria's economy and their potential to do better through higher production, value chain development, local consumption, and export, this subsector of agriculture has remained neglected and underutilised.
Economic analysts are still befuddled by the undesirable transition from a country with overwhelming economic potential on the back of agricultural produce, rich mineral resources, productive youth population, and culture of discipline at independence, to a mono-economy and the progressive erosion of the nation's economic potential.
"Looking back to the 1960s, Nigeria was the second largest producer of cocoa and highest source of FX before investments in the oil sector. Consistently, cocoa became the second highest source of FX for the country," Adeola Adegoke, president of the Cocoa Farmers Association of Nigeria (CFAN), said.
Over 50 per cent of all exports in the 1970s and over 60 per cent in 1980 were made up of cocoa. But as time went on, its share steadily decreased, falling from 49 per cent in 1989 to 22 per cent in 1998. In 2010, cocoa production accounted for only 0.3 per cent of agricultural GDP.
Groundnut, another agricultural produce, sustained the economy through revenue from exports to both foreign and local markets during the agricultural boom. The groundnut pyramids were the pillar of the northern economy and they were also a spectacle as they towered high to a point higher than most buildings in Kano City.
In the 1980s, groundnut production in Nigeria nosedived and what was left of the famous groundnut pyramids in Kano were only stories.
Unfortunately, palm oil, another revenue earner at independence was not spared of the fate that befell cocoa and groundnut trade as the obsession with crude oil dampened enthusiasm for palm oil production, especially after independence. The same fate befell other agricultural produce, especially in the 1980s when rural-urban migration shook the foundation of Nigeria's agriculture.
Most of the development initiatives introduced by successive administrations could not redeem the situation as most of them were described as half measures. Such policies include former President Shehu Shagari's Green Revolution and Olusegun Obasanjo's Operation Feed the Nation. Former President Muhammadu Buhari's notable agricultural policies include the Agriculture Promotion Policy (APP), Nigeria-Africa Trade and Investment Promotion Programme (NATIPP), Presidential Economic Diversification Initiative (PEDI), Zero Reject Initiative, Economic and Export Promotion Incentives, National Agricultural Technology and Innovation Policy (NATIP) and the Food Security Council, among others.
Former President Goodluck Jonathan introduced Incentive-Based Risk Sharing Systems for Agricultural Lending (NIRSAL) through the Central Bank of Nigeria (CBN).
Nigeria's once-thriving palm oil industry is often cited as one of the most miserably failed economic opportunities in the country. As palm oil found wider use in food processing and industry, global demand for the commodity surged. By 1982, worldwide palm oil exports had grown to a staggering 2,400,000 million tonnes per annum.
For most of this period, Nigeria held centre stage as one of the largest producers and exporters of palm oil, accounting for more than 40 per cent of global output in the 1950s. At the time of the country's independence from British colonial rule in 1960, palm oil contributed 82 per cent of national export revenue.
However, the oil boom of the mid-seventies and the subsequent decline of farming proved catastrophic to the sector. By the end of the 20th century, the Nigerian palm oil harvest had dwindled to just seven per cent of global production. More embarrassingly, the once-largest exporter had turned into a net importer of palm oil, sourcing 180,000 MT of the commodity from international markets to meet local demand.
The Nigerian economy for decades has been largely dependent on oil as its main source of revenue, despite several policies, measures and efforts that were put in place to rectify the situation by diversifying into other sources of income.
Despite contributing more than 80 per cent of the country's revenue as well as foreign exchange earnings, the oil sector's contribution to Gross Domestic Product is minuscule. According to the GDP report, the oil sector contributed 6.21 per cent to the total real GDP in Q1 2023, down from the figure recorded in the corresponding period of 2022 and up from the preceding quarter, where it contributed 6.63 per cent and 4.34 per cent, respectively.
Apart from its distraction from other sources of revenue, crude oil production is also a source of security and environmental problems in the country with huge amounts of money earmarked for pipeline monitoring and compensation for environmental degradation caused by oil mining in the Niger Delta region.
The easy revenue provided by oil has also encouraged some sub-national governments to pay much attention to other sources of revenue in their states and that is why apart from Lagos and Ogun states, no other states can survive without the monthly revenue allocation to all tiers of government. This is said to be a contributory factor to the scourge of unemployment and infrastructural decay in the country.
Among other measures put in place to stabilise the economy, the Structural Adjustment Programme (SAP) introduced by former President Ibrahim Babangida liberalised trade and encouraged privatisation and exports. But it also ushered in unbridled importation of cheap and sub-standard products. Local manufacturers could not compete partly because of the high cost of production and the influx of cheap goods. Also, there was no protection for infant industries.
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The result of policy flip-flops was a fall in the growth rate of the manufacturing input. The Nigerian industrial sector is also littered with the carcasses of collapsed industrial estates in places like Lagos, Ibadan, Kano, Port Harcourt, among others.
For instance, many of the major industrial areas have been converted to other uses or completely abandoned.
Confirming the sustained closure of operations, the Manufacturers Association of Nigeria (MAN) said in 2009 that 839 firms shut down that year. As disclosed on the floor of the Senate last Tuesday, 370 firms have closed down in the past year. Today, manufacturers complain of issues like multiple taxation, the falling rate of the rate of naira and the attendant scarcity of foreign exchange, insecurity, energy crisis, inflation, and policy inconsistencies among others.
Perhaps, one of the greatest problems affecting virtually all sectors of the economy from Independence to date is the inadequacy of power supply which is blamed for the slowing down of the economy and collapse of many businesses.
On June 9, 2023, Nigeria adopted the Electricity Act 2023, which repealed the Electricity and Power Sector Reform Act of 2005. This effort has however failed to inspire hope in the economy as the lack of capacity of the current arrangement is worsened by the regular collapse of the power grid, a situation that has continued to compel homes and businesses to rely on generators.
