Nigeria's Diversifying Economy

Recent headlines describe the latest Chinese investments in Africa, and plans build to an $8billion oil refinery in Lagos. The refinery will be first of three to be built in Nigeria by China State Construction Engineering Corporation(CSCEC), as agreed in the $23billion framework signed in May. 

While Nigeria is the largest oil producer in sub Saharan Africa, the regional giant has displayed clear signs of a diversifying economy. By actively taking measures to avoid the constraints that prevent many of the world’s oil producing nations from realizing their full economic potential, other developing sectors compete with the oil industry.

According to a recent report, contribution of resources to Nigeria’s real GDP growth since 2000 (35%) is surpassed by the contribution of services (37%), and rivaled by the agricultural sector (27%). To put these statistics into perspective, one look to the results yielded by the same study in other oil producing African nations: Angola owes 86% of its GDP growth since 2000 to the resource sector, dwarfing contributions from the agricultural (8%) and the service (5%) sectors. Libya owes 63% of its GDP growth to resources, 31% to services, 2% to agriculture.

Nigeria also ranks 8^th out of 40 AGOA beneficiary countries in 2008 exports of agricultural products to the US. In addition to the growing agricultural sector, Nigeria remains one of Africa’s coastal countries with the largest reserves of uncultivated cropland.

Services account for the largest share of GDP growth, the result of a series of economic reforms aimed at stimulating the sector.  The banking industry has increased its assets fivefold since 2000, and the telecom sector has experienced explosive growth as well. Nigeria has overtaken South Africa to become the continent’s largest mobile market, with over 75 million subscribers.

In a recent speech, Adremi Babalola, Minister of State for Finance addressed the importance of economic diversity in the current global economy and described the threats of the global financial crisis and fluctuating oil prices to oil dependent countries.  Minister Babalola encouraged countries to explore the opportunities and potential gains attainable through increased investment in the service sector, specifically in ICT. He expressed his hopes for Nigeria to harness the power of the globally emerging ICT sector to achieve its Millennium Development Goals and sustained economic growth.