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The Political Economy of Nigeria’s Economic Diversification

From all indices, over dependence on one commodity is not healthy for any nation. For Nigeria, it is even very dangerous given our position in Africa and the world.
Chris Uba, News Editor

Some time in 1994, I was asked to cover the annual general meeting and conference of the Nigerian-British Chamber of Commerce (NBCC) taking place at the Federal Palace Hotel on Victoria Island in Lagos. Then, I was the Business/Economy Reporter working for the Business Champion, a business weekly, which was rested a year later. Before leaving for the assignment, my News Editor instructed that I must get a cover story from the business meeting.
The Guest Lecturer and Special Guest of Honour at the meeting was the British High Commissioner to Nigeria, Mr. John Thorold Masefield, who had just assumed duties in the country. The meeting happened to be his first official assignment after accreditation by the Gen. Sani Abacha regime.
After addressing well over 1000 members of the organised private sector (OPS) and representatives of businesses with affiliation with the United Kingdom on how to improve on the socio-economic and political relationships between the two countries, I went to Mr. Masefield for one-on-one interview to shed more light on his speech which bothered on the deplorable situation of the nation’s economy under the military.
My question was how Nigeria could extricate itself from the economic mess, which had affected the quality of lives of the Nigerians. His response was as follows: “It is high time that Nigerians started taking a cue from the countries of South-East Asia, like Malaysia and Singapore. At independence, Nigeria was in many respects ahead of these countries and unfortunately, three decades after, Nigeria has taken a back seat while these countries are in front. These countries, which had nothing at independent, have developed their export sectors such that their balance of trade and payments with the United Kingdom are in their favour, because they now export more to us than we do to them.”
According to Masefield, “Nigeria should learn from them. Nigeria should upgrade her non-oil sector. While oil remains, emphasis should be on the non-oil sector. It should be developed to lessen your dependence on oil. If this is done, you will see that with the assistance of the United Kingdom, your economy will be restored to equilibrium.
It is now 21 years since Mr. Masefield, who has since retired from the service, and many other eminent Nigerians , gave this advice successive administrations (both the military and civilian) have yet to take a bold initiative on the matter. All the much talk-about efforts to diversify the economy are mere rhetoric to create the impression that government is working hard to find solution to the menace. Nigeria remains a mono economy as the country generates over 85 per cent of her foreign exchange from oil and gas exports.
This sluggish approach to the nation’s economic diversification project underscores the age long-held view that the reason members of the Nigerian political elite seek political power is for primary accumulation; to use the state apparatus for self enrichment. This explains the reason oil has remained the fulcrum of the nation’s politics. It also explains the reason political struggle in the country has remained a do-or-die affair. In Nigeria, politics is a zero-sum game. The winner takes all while the looses all. The person who gets the power decides who gets what, when and how of any amount oil blocs. Of course, the blocs are shared to the cabals and cronies. No creative effort is made to reduce the nation’s dependence on fissile fuel.
The closest attempt at economic diversification by the government was the creation of the Nigerian Export Promotion Council (NEPC) through the promulgation of the “Nigerian Export Promotion Council Decree No. 26 of 1976”, now an Act in line with the democratic governance of the country. The functions of this agency among other things are to promote the development and diversification of Nigeria’s export trade and assist in promoting the development of export related industries in Nigeria.
By next year, this agency will be 40 years but regrettably oil and gas remains the centre of the nation’s economy. On the contrary, it provides jobs for supporters and family members of those at the corridor of power. It is also, a source of estacode (out of country allowance) for civil servants who see employment at the agency as an opportunity to trot the globe and earn foreign currency for their personal use rather than for the country– part of their national cake. There is hardly any international exhibition outside country that this agency is not represented. But instead of taking along genuine business people who have made-in-Nigeria products to market to the world, the managers prefer to take civil servants and ‘business’ people who seek opportunity to escape from the country for greener pasture elsewhere.
From all indices, over dependence on one commodity is not healthy for any nation. For Nigeria, it is even very dangerous given our position in Africa and the world. When a country relies on one commodity for foreign exchange, it means that any time other countries that import her product make internal adjustment or find a cheaper source elsewhere, the economy of that country is in jeopardy as Nigeria experienced between the late 1970s and 1980s, a situation that led to the implantation of the BrettonWood inspired Structural Adjustment Programme (SAP) in the country. It is an ugly experience which has yet to be extricated.
This ugly development has re-emerged .In the last one year , oil price has been on the downward trend in the international market. Expectedly, this has affected the nation’s revenues with the adverse consequence that the two-tiers of governments in the country are no longer able to meet their statutory obligations. Some are scaling down operations while others are shirking responsibilities thus pitting them against the organised labour.
Incidentally, in 1984, President Muhammadu Buhari, as the military Head of State then, was struggling to fix the problem when his government was sacked in another military putsch. Now, that he is back at the saddle –as a democratically elected leader- he must not trade the path of his predecessors who presided over large-scale corruption that has characterised governance in this country. He must as a matter of urgency seek ways to de-emphasize the overarching importance of fossil fuel in the nation’s economy. He must, as a matter of fact, realise that without taking proactive measures to address this hydra-headed, the country can scarcely make any headway to economic development. The nation’s current quest to be top 20 economies by 2020 will remain an idle fancy.
President Buhari should emulate the virtues of leaders like General Park Chung-hee, former South Korean leader, Mr Lee Kuan Yew of Singapore, and Mahathir Mohamad of Malaysia who creatively save their countries from crushing poverty and economic slavery.
Park, though a military dictator laid the foundation for his country’s celebrated economic eldorado. Report had it that when General Park Chung-hee seized power in 1961, “South Korea had a per capita income of less than $80 per year. During that time, South Korea was mostly dependent on foreign aid, largely from the United States in exchange for South Korea’s involvement in the Vietnam War. Government’s Saemaeul movement focused on developing rural Korea. The reports, said “the strong leadership of the government, though criticized as repressive and heavy-handed, and the effective use of cheap labour, served as a catalyst for the South Korean economy.”
Reports hold that on account of the foundation laid by Park, “in less than four decades, Seoul was transformed into a global city, a centre of business and commerce in Northeast Asia and a highly developed economic hub, laying the grounds for an advanced technological and communications infrastructure. Koreans consider this rapid growth a symbol of national pride and self-sufficiency. Besides the Saemaeul movement, the Korean government carried out another effective economic development plan called the Five-Year Plan. There were more than five plans created, and they were designed to revive the economy and each of the plans contributed greatly to industrialisation and enlarging the marketplaces of South Korea.”
Also in Singapore, with little or noting Mr Lee Kuan Yew, laid the most solid foundation for the country’s economic prosperity. With his integrity, trust tenacity and vision, Yew built the country to an enviable position.
Also , during Mahathir Mohamad’s 40 years reign as Prime Minister, Malaysia experienced a period of rapid modernisation and economic growth, and his government initiated a series of bold infrastructure projects.
Buhari should trade the way of these leaders who are heroes in their countries. While he works to rid the country of the cancer of corruption, he should not loose sight of the need to stabilise the economy through diversification.

Chris Uba is News Editor of  The Union

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