This is an awesome piece. But I have few comments to make .
1. Viewed critically , the Nigeria’s economy is a combination of economies within an economy. Nigeria runs a federal structure but power ( economic, political and military) is more situated at the center which makes some section of the country to constantly yearning for a proper fiscal federalism.
2. Flowing from one above , most of the central statistics above Nigeria masks a great deal of variations within the economy. If disaggregated, the truer pictures of the sub national structures will unfold.
3. Nigeria’s fiscal operations is heavily influenced by oil revenue. As you correctly wrote, narrow tax base in completed by the oil revenues. But decades of oil deposit has not had markedly positive effects on the lives of the people expect for some few people with access to the National purse.
In addition, the Federal Government derives about 60% of its revenue from oil sales ; while for a large number of states , oil constitutes about 80% of revenue. Nigeria has 36 states and federal capital territory in Abuja
4. Sadly, Nigeria has not come up with a strategy to navigate a future without oil. In a world of renewable energy, what will happen to the Nigeria fiscal operations?
5. Nigeria has good comparative advantage in Agriculture. Agriculture accounts for about 25% of its GDP . Though there has been some improvements in Agriculture output , yet the productivity level is still poor and Nigeria has not taken a real move towards more exports. Maybe the new Africa Continental Free Trade Area ( AfCFTA) will turn things around for the country but productivity needs to improve .
6. Nigeria has witnessed a considerable growth in its service sector in the last 20 years . Service sector now accounts for more than 50% of the GDP. The growth in Telecom sector has fueled the increase in the service sector. More Nigerian youths are getting trained in IT . More youths especially in Lagos are getting into software development, data scien, AI . They are setting up Start up companies ( fintech , agrictech , etc ) which have been attracting interest from Venture Capitalists , Angel investors and Private Equity Firms both home and abroad . Nigeria youths are forging ahead despite the absence of the needed electricity as you mentioned.
7. Two key areas need massive and consistent investment. They are education and health. You hinted at the sad state of health in your piece already. But let me talk about education . They are more out of school children in the Northern Nigeria than elsewhere in the continent if not the whole world . Few students that attend schools are being kidnapped. Some are killed . The public universities in Nigeria which cater for a large number of students have remained shut for about a year now. The University labour union wants the government to spend more in the tertiary education sector , especially for its fulfilment of an agreement it signed with the labour union in 2001 . This is a serious challenge for the country. If Nigeria is to witness its potential; its education sector needs massive investment and an holistic overhauling.
8. Diaspora Remittances ( DR) from Nigerians abroad constitute a significant source of incomes for Nigerian at home. It has averaged about $23 billion annually. In 2018, DR dwarfed oil revenues in Nigeria. DR is a positive outcome of Nigerians migrating out of the country. We can call it “BRAIN GAIN”. If DR is removed or stopped considerably, the Nigerian economy will enter into a prolonged depression.
9. Nigeria’s democracy is expensive to run. Bureaucracy , public servants and politicians eat off the largest chunk of the budget. And their population is a minuscule compared to the entire population. About 70% of the annual budget is spent on Recurrent Expenditure( including debt service) both at Federal and State Levels; while the remaining 30% goes to Capital Expenditure. This is not sustainable in the long run if Nigeria is to increase its potential GDP.
10. Nigerians , especially youths in the informal sector continue to forge ahead despite the unfriendly environment. All what they want is conducive environment. They want an environment in which the public infrastructure is solid and growing. They want peace and security. They want robust education.
11. There is a issue that you left out: corruption. Official corruption is still rife. With more social actors and awareness against corruption, it may be fought .
However, illicit funds still leave Africa and especially Nigeria. They find home in the Western banks . This is not right . Western governments can not be lecturing Africa about corruption while the dollar proceeds of corruption rest peacefully in their banks . I don’t think I will exonerate the Western government connivance in this case . They remain an accessory to the looting going on in Africa so long they make their banks a resting abode for the corruption proceeds .
This is an awesome piece. But I have few comments to make .
1. Viewed critically , the Nigeria’s economy is a combination of economies within an economy. Nigeria runs a federal structure but power ( economic, political and military) is more situated at the center which makes some section of the country to constantly yearning for a proper fiscal federalism.
2. Flowing from one above , most of the central statistics above Nigeria masks a great deal of variations within the economy. If disaggregated, the truer pictures of the sub national structures will unfold.
3. Nigeria’s fiscal operations is heavily influenced by oil revenue. As you correctly wrote, narrow tax base in completed by the oil revenues. But decades of oil deposit has not had markedly positive effects on the lives of the people expect for some few people with access to the National purse.
In addition, the Federal Government derives about 60% of its revenue from oil sales ; while for a large number of states , oil constitutes about 80% of revenue. Nigeria has 36 states and federal capital territory in Abuja
4. Sadly, Nigeria has not come up with a strategy to navigate a future without oil. In a world of renewable energy, what will happen to the Nigeria fiscal operations?
5. Nigeria has good comparative advantage in Agriculture. Agriculture accounts for about 25% of its GDP . Though there has been some improvements in Agriculture output , yet the productivity level is still poor and Nigeria has not taken a real move towards more exports. Maybe the new Africa Continental Free Trade Area ( AfCFTA) will turn things around for the country but productivity needs to improve .
6. Nigeria has witnessed a considerable growth in its service sector in the last 20 years . Service sector now accounts for more than 50% of the GDP. The growth in Telecom sector has fueled the increase in the service sector. More Nigerian youths are getting trained in IT . More youths especially in Lagos are getting into software development, data scien, AI . They are setting up Start up companies ( fintech , agrictech , etc ) which have been attracting interest from Venture Capitalists , Angel investors and Private Equity Firms both home and abroad . Nigeria youths are forging ahead despite the absence of the needed electricity as you mentioned.
7. Two key areas need massive and consistent investment. They are education and health. You hinted at the sad state of health in your piece already. But let me talk about education . They are more out of school children in the Northern Nigeria than elsewhere in the continent if not the whole world . Few students that attend schools are being kidnapped. Some are killed . The public universities in Nigeria which cater for a large number of students have remained shut for about a year now. The University labour union wants the government to spend more in the tertiary education sector , especially for its fulfilment of an agreement it signed with the labour union in 2001 . This is a serious challenge for the country. If Nigeria is to witness its potential; its education sector needs massive investment and an holistic overhauling.
8. Diaspora Remittances ( DR) from Nigerians abroad constitute a significant source of incomes for Nigerian at home. It has averaged about $23 billion annually. In 2018, DR dwarfed oil revenues in Nigeria. DR is a positive outcome of Nigerians migrating out of the country. We can call it “BRAIN GAIN”. If DR is removed or stopped considerably, the Nigerian economy will enter into a prolonged depression.
9. Nigeria’s democracy is expensive to run. Bureaucracy , public servants and politicians eat off the largest chunk of the budget. And their population is a minuscule compared to the entire population. About 70% of the annual budget is spent on Recurrent Expenditure( including debt service) both at Federal and State Levels; while the remaining 30% goes to Capital Expenditure. This is not sustainable in the long run if Nigeria is to increase its potential GDP.
10. Nigerians , especially youths in the informal sector continue to forge ahead despite the unfriendly environment. All what they want is conducive environment. They want an environment in which the public infrastructure is solid and growing. They want peace and security. They want robust education.
11. There is a issue that you left out: corruption. Official corruption is still rife. With more social actors and awareness against corruption, it may be fought .
However, illicit funds still leave Africa and especially Nigeria. They find home in the Western banks . This is not right . Western governments can not be lecturing Africa about corruption while the dollar proceeds of corruption rest peacefully in their banks . I don’t think I will exonerate the Western government connivance in this case . They remain an accessory to the looting going on in Africa so long they make their banks a resting abode for the corruption proceeds .
Many thanks for this nice piece .
Shola , a Nigerian, wrote from Lagos , Nigeria
Twitter : @ Obzzzy
Thanks for writing the comment Shola
Many thanks Nathan.
Great .