INTRO: There has never been such consensus on any socio-economic and political issues in Nigeria as there is on the need for the diversification of Nigeria’s economy. This is perhaps because the consequences will know no bounds. Right from 1960s, about the time when a Head of State that ruled Nigeria was reported to have said that Nigeria had money but that the problem was how to spend it, through the very period when another Head of State that ruled Nigeria invited all African countries to come to Lagos with their idols just to dine and wine with Nigeria’s petro-dollars under the code-name FESTAC ’77, to the present 4th Republic, Nigeria’s economy has been a mono-cultural economy in which oil constituted 95% of the Country’s export earning, and 70% of the government’s revenue. Since then, there have been sincere calls for diversification of the economy by revitalizing for instance, the erstwhile neglected Agric. Sector of the economy. Now, one may ask, why does Nigeria needs to diversify her economy, especially as oil provides such amount of revenue that could make a Head of State to announce with a glee that Nigeria had money?
#1 Nigeria Needs to Diversify Her Economy in Order to Achieve Economic Stability: The concept of economic stability simply means economic growth plus low inflation rate. Achieving economic stability is not possible in an oil-based mono-cultural economy such as Nigeria, owing to the vagaries of the international oil market. The link between the international oil market and Nigeria’s economy makes it that whenever the oil market sneezes, Nigeria’s economy catches cold. For instance, before the fall of oil price that started in 2014, Nigerian economy experienced robust economic growth of about 7% per year. “However, in the wake of the oil shock, growth slowed sharply in 2015 and the economy experienced an outright contraction in 2016.” This would not have been the case in a diversified economy given the fact that non-oil sectors would have been performing in their various spheres.
#2 Nigeria Needs to Diversify Her Economy in Order to Create More Jobs: Economic diversification efforts such as the revitalization of the moribund Agricultural Sector of the Nigerian economy will create more jobs for the teeming unemployed Nigerian youths. New data published by the National Bureau of Statistics (NBS) shows that the unemployment situation in Nigeria worsened having increased up to 14.2% in the last quarter of 2016, from 13.9% in the preceding quarter. This development according to the report made it the ninth consecutive quarter that the unemployment rate in Nigeria has increased. A diversified economy will absorb the majority of the unemployed Nigerians, reducing the unemployment situation in Nigeria to the barest minimum called the natural rate of unemployment.
#3 Nigeria Needs to Diversify Her Economy Because of Her Fast Depleting Oil Reserves: It is worthy of mention that fossil fuels are nonrenewable; if at all possible, it takes several millions of years. There are concerns that Nigeria’s oil reserves are fast depleting due to continued exploitation without further exploration, or luck in new discoveries. In 2016 for instance, the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) said that pursuant to Nigeria’s vision of being a fully industrialized economy by 2020, the country needs to produce up to 15 billion cubic feet per day (bcf) of gas; and regretted that so far, there has been no addition to the country’s oil reserves. The implication of this fact is that Nigeria will one day have no oil to exploit hence, the need for diversification.
#4 Nigeria Needs to Diversify Her Economy Because Oil is Becoming Less Relevant: The relevance of oil is winding down due to technological advancement. Cars are the largest users of oil and today, technology has achieved the invention of electric cars which needs no oil. It follows therefore to mean that the demand of oil will soon crash especially as electric cars grew by 60% in Japan, a country in Asia which is the largest consumer of Nigerian oil. Japan has today more electric charge points than petrol stations. Diversification is therefore imperative against the technological trends of our jet age which continuously search for alternative sources energy.
#5 Nigeria Needs to Diversify Her Economy for Improved Standard of Living of Her Citizenry: We have demonstrated that the diversification of Nigerian economy will among other things bring about job creation and economic stability. These factors are germane in the improvement of the standard of living of Nigerians given that both will reduce poverty and starvation, and increase the per capita income of Nigerian citizens respectively.