IS NIGERIA’S ECONOMY TRULY NOT DIVERSIFIED?

Is Nigeria’s economy truly not diversified?
There is a new and popular buzz word in town (actually not so new, but definitely popular) that pops up in conversations these days, whether from the corridors of powers, at press conferences and even street conversations. Yes, we all know the word, “Diversification”. This our new favourite word creeps in (sorry, scratch that, charges into) every conversation especially on talk shows/programmes, be it on television or radio, lets also not forget newspaper articles, posts (including ours truly) and almost grants “Sage” status on anyone who can use it in a sentence written or spoken when talking about Nigeria’s economy.
What is diversification? What does it mean to have a diversified economy? And what is the true state of Nigeria’s economy? Starting from the latter question, we can attempt to answer the former questions. Wikipedia (https://en.wikipedia.org/wiki/Economy_of_Nigeria) describes Nigeria’s economy as “a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal GDP, and the 20th largest in terms of Purchasing Power Parity. It is the largest economy in Africa; its re-emergent, though currently underperforming, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African sub region. [Emphasis mine. Spoiler alert – Nigeria’s economy is diversified.” If you didn’t get it reread this paragraph again from the top”]. Nigeria recently changed its economic analysis to account for rapidly growing contributors to its GDP, such as telecommunications, banking, and its film industry”.
An excerpt from an article of mine in early 2016, is paraphrased below (pre-devaluation of the Naira, this was fairly accurate).
“Nigeria represents one of the most developed markets in Africa and currently ranks as the continent’s largest economy. With a GDP in excess of $509 billion and per capita income of $2,689 coupled with a growing population of over 170 million the 7th most populous in the world; Nigeria can reasonably be termed an investor’s delight.
The GDP was rebased in 2014, shifting the base year from 1990 to 2010, with the exercise increasing the GDP by 89% to $509.97 billion. This enabled Nigeria to jump 10 places in Global GDP rankings to 26th position leapfrogging South Africa ($345 billion), Thailand ($401 billion) and Argentina ($485 billion). Unfortunately Nigeria’s per capita income of $2,689 which increased by almost 70% post rebasing, is still lower than that of other economies in the top 50, in fact Nigeria’s per capita income is almost a third of South Africa’s (about $8,000)”. My data were sourced from the Nigerian Bureau of Statistics [NBS] and Oxford Group’s Nigeria 2015 report.
When I get into discussions/arguments about the state of Nigeria’s economy which is almost a daily affair, I get skeptical (or strange) looks when reaffirming that Nigeria’s economy is actually diversified and that it is only the Federal Government (FG) that has not diversified its earnings (popular data usually bandied around, claim over 85% of the FG’S export earnings is from Oil).
Now back to the first question asked (what is diversification?), according to Professor Zagros Madjd –Sadjadi a Professor of Economics, Winston-Salem State University, when answering in Quora (https://www.quora.com)
“Economic diversification can mean different things depending on the context. The predominant way of thinking about it is what is known as economic complexity, which is the idea that countries should not be dependent upon a small number of products for their economic livelihoods. For example, a country that has an economy based predominantly on oil production is neither particularly complex nor economically diverse. On the other hand, a country that has a strong manufacturing base, a vibrant services sector, a burgeoning natural resource sector, and a booming agricultural sector is quite complex and diverse. To get an idea of the relative complexity of various economies, I suggest that you visit the Atlas of Economic Complexity at Harvard University: http://atlas.cid.harvard.edu/”
If we take a look at the description of Nigeria’s manufacturing sector as described in Wikipedia (re-emergent, underperforming though 3rd largest in Africa) and compare it with the example of a country that has a complex and diverse economy as described above (with a strong manufacturing base), we can then begin to understand the reason for the (misinformed) cry for diversification. We should understand that while Nigeria’s economy might not be described as “quite complex and diverse”, Nigeria is by no means a mono-economy, she actually has a multi-product/diversified economy.
So in essence what the FG should really be talking about is not how to diversify the economy (that horse left the barn a long time ago), but how to ensure through a “good road map” (please note this is not rocket science, also see From Third World to First: The Singapore Story – 1965 -2000 by Lee Kuan Yew), that Nigeria of the future (with the will and seriousness, within a [say 10 or 15 year period) is described as a country with a “strong manufacturing base, a vibrant services sector, a burgeoning natural resource sector, and a booming agricultural sector”.
Please can we change our conversations/arguments and start looking for/at new narratives?

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Is Nigeria importing too much? Is this what is driving the Dollar price higher?

It was a Wednesday evening, a few minutes to six, and I was already home (not bad for a Lagos day). Well what to do with all this extra time (a rarity? Definitely), OK why not go get a loaf of bread from the neighborhood bakery and acquire my favorite bread fresh? Definitely think so.
A few minutes and a loaf of faintly warm sliced bread later, who do I run into? Sorry forgot to mention my neighborhood is adjacent to Unilag (University of Lagos) back gate. Ahem back to my run in, a young family friend, he is in his early thirties (young?), single (always nosing around a young female relation of mine) and a dentist with a federal health facility in town.
Bros, he hails, Doc Ola I reply, whats good? And we jaw jaw for few more minutes (or seconds). Doc was actually sitting on an outside bench in front of a small drinks/provisions store, nursing a bottle of Hero or “33” lager beer (will confirm from him later).
Then one of the most popular topics in the land, Doc provided the opening in Pidgin English, Bros na wa for the dollar price o, we go fit survive like this? And the bad thing, we no dey produce anything, so so import, na em we dey import everything. My eyes glaze over a little, a red mist starts settling… (ok, just kidding). But I really get ticked off (or slightly) when I hear that Nigeria produces nothing, not just because I like to think of myself as some sort of patriot but mainly because it is so untrue. However it has been repeated at so many fora time and time over, even by Government officials (who really should know better) that most people now take it as the truth.
I took a deep breath, calmed myself (counted in progressions of 19, stopped at 95), then looked past Doc into the shop. I quietly tell myself this has to be quick and brutal, its almost 6.30 and I do not want to get to my flat later than 7. Ola I start, our problem is not importation generally, but specifically the importation of petroleum products. If we stop importing petroleum products a large chunk of the pressure on our foreign reserves will disappear. Every other thing we import including toothpicks (which has received the most bashing by proponents of Nigeria over imports) has no severe impact on our foreign reserves.
Big fat lie number 2, Nigeria produces nothing. Ola, I continue calmly (though heart and pulse rate are revving slowly), look at this shop, he does, about how many of this kind of shop are on this street (we count 5, and the street is not up to a 100 metres long). Is it possible we have at least 50 of these shops in every 1 or 2 square kilometers? (Possible we guess). Now look more closely do we have up to 40 items in this shop? We both agree there must be. Ok then, Ola please look around and see if you can find one single imported item in this shop (I have done this before in similar shops in and outside Lagos- street corner shops hardly sell imported items).
We start with the drinks, coke/sprite- Nigerian Bottling Company, CWAY range- CWAY Nigeria Drinking Warer Science & Technology Co. Ltd (what???), Viju Range- Made in Nigeria, Pepsi/&7up – same, Big Cola – same, 6 different brands of beer- same, 4 brands of bottled water- same, satchet water- same, Dangote salt and Mr. chef salt, Blueband margarine, Nabisco range of biscuits, Okin biscuits, beloxxi biscuits, Ok sweets and gums, Indomie noodles and 2 other noodle brands, Close-up toothpaste, Lux soap, Joy soap, Premier soap, knorr cubes, Maggi cubes and we keep ticking off and all products are well and truly made in Nigeria, I gloat a little, check my time its almost 6.50pm.
Ola with his jaw a little lower, then blurts out, if this is true then why is there always talk of we don’t produce anything, we import everything. Feeling extremely wise (even beyond the ages), I then have to admit, your guess is as good as mine. Maybe because we really do not have data, people can throw any figures they like, including government officials, but what is mostly said out there is not true.
Wikipedia (https://en.wikipedia.org/wiki/Economy_of_Nigeria), I tell Ola, describes Nigeria’s economy as “a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal GDP, and the 20th largest in terms of Purchasing Power Parity. It is the largest economy in Africa; its re-emergent, though currently under-performing, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African sub region. This was mostly true up to early 2016 up to the devaluation of the Naira, but Nigeria’s position is still around there.
It’s now almost 7pm, I tell Ola, I have to take my leave, I tell him to come over any of the weekends and we can discuss solutions, but he can now prove that Nigeria does produce (manufacturing sector 3rd largest in Africa) a variety of goods. I really have to go, I told wifey I would be back in a few minutes.
P.S The shop did have some tinned mackerels (tomato sauce) and sardines (Made in Japan and Morocco I think, but Ola didn’t notice and I refused to look in that direction)