Performances of critical sectors of Nigeria’s economy reflect much is needed to be done as oil still overshadows accruals as the mainstay of the economy. Overdependence on oil has not been healthy for the economy, a fact that recent realities have come to establish. The shortfalls from the inconsistencies of the oil market and the growing demands of the economy with rising realities of the Nigerian polity have pose constrains on the health of the economy, reflecting supply deficiencies from one major source.
Oil still remains over 70 per cent, the large sum of accruals from Nigeria’s export and major source of foreign exchange. Fall in oil prices saw the Country sliding into recession from 2016 when global oil prices crashed as low as $30 per barrel. Recovery from recession has been challenging as the Country is yet to recover from the strains of the shock. Although, recently oil prices surged up to an average of $100 per barrel, the yielding has not in any way enough to balance the deficits of outputs suffered by the economy. The fact that the recent surge in global oil prices above $100 couldn’t make up for inadequacies to refocus the economy from downward slope, is a reflection that oil in itself is insufficient as a base for the economy to solely rest upon and its proceeds apparently becoming inconsequential to the enormous demands of the Nigerian economy.
This fact, speaks to the need for deliberate attention and intervention to vitalise the workings of non-oil sectors of the economy, many of which the Country have potentials for export advantages. The profile of Nigeria’s non-oil sector export value still remain considerably unappealing and irreconcilably low in comparison to the level of output and accruals obtainable if the potentials and opportunities of most of these sectors, say agriculture, mining, manufacturing, steel, Information and Communication Technology, etc, are being fully optimised.
Recent records revealed Nigeria’s foreign trade fell quarter-on-quarter (QoQ) by N200 billion or 1.5 per cent to N12.8 trillion in the second quarter of the year (Q2’22) from N13 trillion in Q1’22. The National Bureau of Statistics (NBS) in it’s recent Foreign Trade in Goods Statistics report for Q2’22, revealed foreign trade in Q2’22 comprised of exports valued at N7.4 trillion and imports worth N5.4 trillion. The bureau stated that the value of crude oil exports, which accounted for 79.7 per cent of total exports in Q22 22, rose by 5.1 per cent to 5.9 trillion from 5.6 trillion in Q1’22.
The report read: “Nigeria’s total merchandise trade stood at 12.8 trillion in Q2’22, indicating a marginal decrease of 1.5 per cent over the value recorded in Q1’22 and 32 per cent higher when compared to the value recorded in Q2’21.The value of total export stood at 7.4 trillion in Q2’22, the value accounted for 57.7 per cent of total trade. The export value rose in Q2’22 by 4.3 per cent against the level recorded in Q1’22 and by 47.5 per cent when compared to Q2’21. Exports by section revealed that Nigeria exported mainly mineral products which amounted to 6.7 trillion, or 91.46 per cent of total export value; followed by ‘Products of the chemical and allied industries’, which were valued at 318.51billion (or 4.3 per cent of the value of total exports) and ‘Vegetable products’ worth 100.12billion (1.35 per cent of the value of total exports). The value of exports trade in Q2’22 was dominated by crude oil exports valued at 5.9 trillion which accounted for 79.7 per cent of total exports while non-crude oil exports value stood at 1.49 trillion or 20.2 per cent of total exports of which non-oil products contributed 675.08 billion representing 9.11 per cent of total exports.”
On imports the report revealed that: “During the second quarter of 2022, total imports were valued at 5.4 trillion accounting for 42.3 per cent of total trade. The import value fell by 7.9 per cent in Q2’22 compared to the value recorded in Q1’22 but increased by 15.8 per cent compared to the imports value in Q2’21.” It is apparent that the fall in foreign trade value, particularly export is non appreciable.
It is apparent that Nigeria’s economy cannot survive mainly on oil. The demands of the economy has inarguably outgrown what only oil can mainly satisfy. Significant contributions from other sectors have become pertinent and non negotiable if the economy will receive the strength of stability for significant growth on sustainable strength for virility.
Looking into the growth of other sectors is pertinent for future purposes as realities of the patterns of global attention is driving towards green economy, where the demands for fuel would become significantly low; thus losing its global value. This value, it is known, would continue to suffer erosion on gradual dimension as new technologies take evolving phases. For instance, the production of electric cars has grown significanlty and is spreading gradually around the world. In no too far distant future, its widespread would bring a paradigm shift in the demands for automobiles, thus reducing significantly the demands for fuel products. Developments of similar kinds are taking place with stronger drive with deep research for a shift towards green economy. The demands for oil in this light have been projected to fall as time goes by.
In this light, it is not negotiable for any proactive, sensitive and rational government where oil forms a significant base of its economic structure to begin developing alternative formations. Nigeria which economy categorically lies with overreliance on oil must take heed.
The government must not only awake to this reality, but must proactively drive machineries to the demands to develop critical sectors which would outlive oil. These sectors, with lasting sustainable strength, must be driven along growth path by deliberate measures to grow them to the height of virility where they can in no too far future distance stand in good stature competitively with oil in their accruals. This is essential not just for prevailing pressing demands of the economy, but also for future sustainability upon which the economy can rest conveniently for forward drive unto virility.