Deregulation or diversification? The Panacea to Nigeria’s Economic Woes (Part 1)

It is only reasonable one has a full understanding of a particular subject matter before proclaiming and or forming judgement or opinion on it. Deregulation or diversification, the panacea to Nigeria’s economic troubles, there should be some level of understanding of the two variables before the discussion is delved into. Deregulation is the reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. While diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets.

Traditionally, diversification has been applied as a strategy to encourage positive economic growth and development. In the context of climate change adaptation, it takes on new relevance as a strategy to diversify away from vulnerable products, markets, and jobs toward income sources that are low-emission and more climate-resilient, unlike crude oil which the Nigerian economy has over the recent decades been dominated by. Crude oil accounts for about 10% of the country’s GDP, 70% of government revenue and more than 83% of the country’s total export earnings, according to OPEC. Nigeria is the world’s 8th oil exporter, and its oil reserves are estimated at 35 billion barrels.

Nigeria used to have a very strong robust economy, purportedly the biggest in Africa, being a big cocoa, rubber and several other agricultural produce-exporting nations, even before crude oil became a thing shortly after the civil war. In a 2010 article published in Nations Encyclopedia, it was made known that; “The oil boom which Nigeria experienced in the 1970s helped the nation to recover rapidly from ravages brought upon by the civil war and at the same time gave great impetus to the government’s program of rapid industrialization. Many manufacturing industries sprang up and the economy experienced rapid growth of about 8 per cent per year that made Nigeria, by 1980, the largest economy in Africa”.

The growth, however, was discontinued. The new oil wealth did little to reverse widespread poverty and the collapse of even basic amenities and social services. The iron and steel industry started with the help of the Soviet Union, still has not achieved an optimum level of production. The oil boom also engendered paucity of labour in the agricultural sector as members of the rural workforce migrated to jobs in the urban construction boom and a growing informal sector.

When the price of crude oil fell and corruption and mismanagement still prevailed at all levels, the economy became severely depressed. The urban unemployment rate rose remarkably and crime also increased as a larger percentage of the population lived below the poverty line. As there have been varying economic policies taken by different regimes ranging from privatisation and or deregulation of many state industries in a bid to revitalise the economy which yet is at a deplorable state as little or no success has been made, there have been several calls for a shift away from the oil which has been over the time belaboured if Nigeria’s economy would be totally revamped.

Aside from the fact that deregulation has been done over and it has seemed like mediocrity recycled to give off mendacity. A major reason I share and sympathize with proponents of diversification rather than deregulation is that I have asked myself if there was something else Nigeria was doing when it was the biggest economy before crude oil, why not go back to it now that crude is not selling as it used to. Hence, I clearly and unequivocally tilt towards diversification in a bid towards ending the Nigerian state’s economic doldrums, and this shall be a fulcrum around which another article, a sequel to this will revolve around.

Yusuff Ibrahim

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