Nigerias Economic Evolution and Future Growth

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Table of Contents

Introduction
Country Overview
Political History
Economic History
The Current State of the Economy
Economic Growth
Recommendations for the Government
The Road Ahead
Conclusion
References

Introduction

The Federal Republic of Nigeria is a country located in the western part of the African Continent. It borders Niger to the North, Cameroon to the East, and Benin to the West, and its capital is located at Abuja. Lagos City is the most populous city not only in Nigeria but also in Africa. Nigeria is the most populated country in Africa and the seventh most populous country in the whole world. Its population is estimated at approximately 206 million inhabitants as of 2019 (Falola et al., 2020). The paper is going to tackle the economic evolution and the current economic status of Nigeria.

Country Overview

Agriculture is one of the main contributors to the countrys economy. Among the food crops produced in Nigeria are yams, yataro, and cassava as the primary food crops in the South, and sorghum, millet, cowpeas, and maize in the North. Rice is an important staple food for most Nigerians. Palm trees and rubber trees in the South, and peanuts, cacao trees, and cotton in the North are the cash crops produced in Nigeria. These cash crops are exported to foreign countries, and the revenue obtained from them facilitates economic growth.

The country also has several industries, both modern and traditional, that contribute to the economy. The modern industries in Nigeria include steel mills, pulp and paper mills, petrochemical plants, and aluminum smelters (Oburota & Ifere, 2017). These industries are an addition to existing industrial sectors, such as tourism, textile, tobacco, beverages, and cement industries, controlled by foreign investors. All these industries contribute immensely to the economy of Nigeria.

There is a significant disparity between the rich and the poor regarding income and wealth distribution in Nigeria. According to Oxfam, the five wealthiest Nigerians, including the richest man in Africa, Aliko Dangote, have a combined US $ 29.9 billion wealth (Ndubuisi, 2017). However, 40% of Nigerians (approximately 83 million) live on less than a dollar a day. Furthermore, the countrys PPP GDP has tripled from the US $ 175 million in 2003 to the US $ 630 million in 2018 (Ndubuisi, 2017). This shows how the economy of Nigeria has grown with time.

Political History

The Federal Republic of Nigeria was a British colony that gained its independence on October 1, 1960. Two Nigerian freedom fighters led the independence movement. These two were Nnamdi Azikiwe as the President and Abubakar Balewa as the Prime minister (Israel & Okpalaeke, 2017). The independent country achieved its full status as a Republic on October 1, 1963. After a brief period of happiness resulting from the independence, Nigeria started manifesting the weaknesses it had as a country (Israel & Okpalaeke, 2017). There were constant conflicts and mistrust among major ethnic groups in Nigeria motivated by ethnic competition, inequality in education, and economic inequalities.

There were attempts to unite the conflicting regions to form a unitary government, but they all failed. In 1967, Eastern Nigeria under General Ojukwu decided to secede and form the sovereign republic of Biafra (Onuoha, 2018). This marked the beginning of a civil war that ended briefly in 1975 with the overthrow of Gowons Government and General Murtala Mohammed Governments installation, which brought reforms. The two most dominant political parties are the Peoples Democratic Party (PDP) and All Progressive Congress (APC) (Igwe, & Amadi, 2021). APC is a coalition of political parties that came together to remove PDP from power (Sule, Sani & Mat, 2018). Furthermore, the Nigerian Government legislated the Land Use Act of 1978 to ensure land accessibility to all farmers. However, many reforms in the act are yet to be implemented.

Economic History

Nigeria has always depended on petroleum and natural gas as the primary source of revenue for the Government. In the 1970s, petroleum contributed 87% of the countrys export and 77% of the Governments revenue (Matemilola, 2017). Currently, 40% of Nigerians live below the poverty level as the agricultural sector remains in crisis (Akindola & Ehinomen, 2017). The main currency used in Nigeria is the Naira which the Central Bank of Nigeria issues. The currency has been devalued severally since 1980. The countrys main exports include crude oil, cocoa beans, and rubber to the European Union countries, India, and the US (Ndubuisi, 2017). In contrast, the main imports are automobile, textile, paper products, chemicals, and food from the US, China, and the EU (Matemilola, 2017). Thus, the Nigerian economic history is characterized by diverse players which contribute to its current state.

The Current State of the Economy

The countrys economy is affected by several challenges in its growth. These challenges include inadequate infrastructure, insufficient power generation and supply, and over-reliance on petroleum for government revenue. The Nigerian economy is also burdened by an enormous foreign debt that requires millions of dollars to service. The Government has introduced customs regulations to encourage economic growth in the country by emphasizing locally produced goods (Ogunleye et al., 2018). Three foreign countries are interested and involved in the economic affairs of Nigeria. These are the United States, China, and, to a lesser extent, Russia, which is interested in its nuclear energy (Sertoglu et al., 2017). Therefore, it is crucial to note that various foreign countries have expressed their interests towards Nigeria.

Economic Growth

Nigerias economy has been growing considerably since the installation of the civilian government in the mid-1990s. However, despite economic growth, the wealth distribution is unequal as only a few individuals control an outstanding share of the economy (Nyoni & Bonga, 2018). While the proportion of poor Nigerians has decreased slightly, the population has grown by 54.3% since 1970 (Olayungbo, 2019). This population increase has led to the rise in people living below the poverty levels (Dauda, 2017). Thus, it is important to note that the Nigerian economy has grown considerably over the past few decades.

Recommendations for the Government

The government of Nigeria can take specific strategies and policies to help it ensure economic growth and equal income and wealth distribution among its citizens. Firstly, the government can work on the diversification of the economy. This will help the country prosper economically, even during instances where the oil prices decline. Secondly, the government can enhance its security to attract more investors. The threat of security by the Boko Haram militia has threatened several potential private investors from investing in Nigeria (Ighobor, 2018). Lastly, the government can develop the right monetary policies to ensure easy accessibility to credit facilities for small and medium enterprises.

The Road Ahead

There needs to be a significant change in behavior of the various foreign powers interested in Nigeria. First, they need to avoid giving aid to the country with some demands guaranteed to the aids. They should also reduce their active involvement in the countrys economic affairs as it has led to a deeply divided country. They should make their intentions right and work towards alleviating poverty among the poor Nigerians. When these countries adopt these new behaviors, there will be a positive change in their economic growth and citizens living standards.

I expect the population of Nigeria to grow more than it is right now. There may be approximately 242 million inhabitants by the year 2030, and the poverty levels may also rise by around 7%. This is because the growth in the economy is not tantamount to poverty eradication, as highlighted above. Consequently, I hope that the Nigerian government will diversify its economy, improve its security and infrastructure, and develop viable monetary policies. This will help in the development of the economy and the eradication of poverty in the country.

Conclusion

The economy of Nigeria has grown over the past decades and emerged as the largest economy in Africa. This has been motivated by several factors, such as privatizing formerly state-owned corporations and private and foreign investments. Consequently, petroleum has been the most significant contributor to the countrys economic growth. However, issues like insecurity, inadequate infrastructure, and unemployment have impeded the development of its economy in the past few decades. Solutions to these challenges include creating employment opportunities for the youths who are the majority, improvement of infrastructure, and enhancing security.

References

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Dauda, R. S. (2017). Poverty and economic growth in Nigeria: Issues and policies. Journal of Poverty, 21(1), 61-79. Web.

Falola, T. O., Kirk-Greene, A. H. M., Ajayi, J. F. A, and Udo, R. K. (2020). Nigeria. In Encyclopedia Britannica. Web.

Ighobor, K. (2018). Closing Africas wealth gap. Africa Renewal. Web.

Igwe, P. I., & Amadi, L. (2021). Democracy and political violence in Nigeria since multi-party politics in 1999: A critical appraisal. Open Political Science, 4(1), 101-119. Web.

Israel, U. E., & Okpalaeke, P. (2018). Ethno-political conflicts and the One Nigeria Project: Issues and lessons from the First Republic, 1960-66. Journal of Humanities And Social Science, 10(2), 64-76.

Matemilola, S. (2017). The challenges of food security in Nigeria. Open Access Library Journal, 4(12), 1. Web.

Ndubuisi, P. (2017). Analysis of the impact of external debt on economic growth in an emerging economy: Evidence from Nigeria. African Research Review, 11(4), 156-173. Web.

Nyoni, T., & Bonga, W. G. (2018). What determines economic growth in Nigeria? Dynamic Research Journals (DRJ) Journal of Business & Management, 1(1), 37-47.

Oburota, S. C., & Ifere, E. O. (2017). Manufacturing subsector and economic growth in Nigeria. Journal of Economics, Management and Trade, 17(3), 1-9. Web.

Ogunleye, O. O., Owolabi, O. A., & Mubarak, M. (2018). Population growth and economic growth in Nigeria: An appraisal. International Journal of Management, Accounting and Economics, 5(5), 282-299.

Olayungbo, D. O. (2019). Effects of oil export revenue on economic growth in Nigeria: A time-varying analysis of resource curse. Resources Policy, 64, 101469. Web.

Onuoha, G. (2018). Bringing Biafra back in: Narrative, identity, and the politics of non-reconciliation in Nigeria. National Identities, 20(4), 379-399. Web.

Sertoglu, K., Ugural, S., & Bekun, F. V. (2017). The contribution of agricultural sector on economic growth of Nigeria. International Journal of Economics and Financial Issues, 7(1), 547-552.

Sule, B., Sani, M. A. M., & Mat, B. (2018). Opposition political parties and democratic consolidation in Nigeria: Examining All Progressive Congress (APC) in the 2015 general elections. Tamkang Journal of International Affairs, 21(4), 81-112. Web.

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