Nigeria is greatly dependent on oil, which is among the natural resources that the country is greatly endowed with. Unfortunately, Nigeria’s economy suffers anytime there is a decline in oil prices. For instance, the country suffered damaging consequences from the sudden decline in oil prices in the period between 2014 and 2017, in which prices fell from $100 to $50 per barrel respectively (Oxford Business Group). For this reason, the government should seek for alternative ways of stimulating Nigeria’s economy.
Diversification in Nigeria’s Economy
The first solution to help in growing Nigeria’s economy is investing in agriculture (Akujuru 28). Agriculture is one of the major sectors that has vast opportunities for the country’s economic growth. It is also the most competitive and strategic way of securing industrialization and the future. This sector is responsible for creating employment in comparison with other sectors, earning foreign exchange, providing raw materials for industries and plants, and providing food security (Akujuru 28). Fortunately, the country boasts of agricultural friendly climate, livestock, expansive lakes and rivers, and coastal and marine resources. In case the country re-focuses on agriculture, there is a great likelihood that gas and oil will be outpaced on the long-run (Akujuru 28).
Second, industrialization can lead to the growth of the economy (Akujuru 29). This growth can occur through providing the requisite competitiveness, technology transfer, research and development, foreign investment, export base expansion, employment creation, foreign investment, and mass production. The need for industrialization is because Nigeria has over years imported most of its primary products (Akujuru 29). This is a great challenge because manufacturing is the supporting sector for any economy, and embraces the great function that technology and science plays in the processes involved during the manufacture of products. The technological process of converting and transforming raw materials into diverse categories of goods and services for consumption is responsible for national development and prosperity. The success of Dangote cement in the country is a reflection of what could happen if the country focused on increasing industrialization.
Third, the country needs to focus on personnel development (Akujuru, 34). Investing in her citizens is the best way to secure economic growth in future. Importantly, Nigeria has a great population that could greatly affect the economy in case the government invests on them. Personnel development can happen if Nigeria tries to reduce the level of illiteracy and poverty in the country (Akujuru, 35).
Oil Revenue-sharing Policies
Revenue-sharing is a strategy that countries use to tranquilize marginalized ethic groups (Strachan 6). In Nigeria, most poor communities live in the Niger Delta, which is rich in oil. The Federal Account (with oil revenue) is used for most inter-governmental transfers. The Nigeria parliament is mandated to determine the formula for revenue-sharing after five years. Based on the constitution; land mass, population, internal revenue generation, and equality of states must be considered when making decisions on oil revenue-sharing. The constitution also states that a minimum of 13% should be retained for oil producing states (Strachan 6). Unfortunately, Nigeria has got one of the most inefficient revenue-sharing arrangement because the Niger Delta suffers from under-development which causes great unrest. Revenue-sharing policies have intensified the rate of corruption within the central government and Niger Delta (Strachan 6).
To alleviate socioeconomic challenges and violent extremist activities, there is need for clearly-stated objectives (NRGI 3). In most cases, revenue-sharing systems are developed in the absence of a clear understanding of what the systems are meant to achieve. Therefore, there should be clear objectives to help in fostering development. Second, the expenditure responsibilities should be well understood (NRGI 3). This means that public service costs should be aligned with decentralization of fiscal revenues. Alignment is vital in preventing wasteful infrastructure, local inflation, and unsustainable public sector wage escalation.
- Akujuru, Chukwunonye Abovu. “Revenue allocation in Nigeria and the dependency on oil revenue: The need for alternative solutions.” Global Journal of Arts Humanities and Social Sciences, vol. 3, no. 2, 2015, pp. 19-36.
- National Resource Governance Institute (NRGI). “Natural Resource Revenue Sharing. UNDP, 2016, resourcegovernance.org/sites/default/files/documents/nrgi_undp_exec-summary.pdf. Accessed 11 March 2019.
- Oxford Business Group. “Nigeria’s Economy Displays Strong Economic Growth in 2017.” n.d, oxfordbusinessgroup.com/overview/onwards-and-upwards-growth-has-begun-pick-following-recession-2016. Accessed 11 March 2019.
- Strachan, Anna L. “Oil and Gas Revenue Sharing”. Helpdesk Research Report, 2014, www.gsdrc.org/docs/open/hdq1123.pdf. Accessed 11 March 2019.
