The Nigerian Economy – A Precise perspective on the route to travel this year

A Primary Product Economy with Weak States that are not able to Lead Growth

Differences in commodities advantage either through agricultural or mineral resources determine the success or failure of States in Nigeria. A few States with industrial and commercial advantages such as Lagos and Ogun also reap economic benefits given their unique positioning. However, economic opportunities and potential for growth are more pronounced in just four regions out of the six regions of Nigeria with the North East being the least advantaged given the activities of terrorists which has been raging for almost a decade now in that part of the Country.

Searching for the Right Type of Security Architecture

While the Buhari government scores relatively high in the area of security and attempts to reintegrate the North East into Nigeria’s economic architecture, the reality is that tensions originating from states/regions excluded from economic growth and employment opportunities will continue threaten the sustenance of growth in states/regions that currently enjoy economic advantages. It is therefore necessary for the government to look at national security architecture beyond military presence in troubled regions, as the root cause of tensions and political instability are more linked to Nigeria’s current combined unemployment and underemployment statistics which is put at 45%, and the non engagement of the youth segment of the population in gainful economic activities. A clear-headed policy in this direction will be necessary to ensure sociopolitical stability and sustainable economic growth.

Current Opportunities Map

A combination of resource endowments and favourable global commodity prices now determine which states/regions enjoy growth. Two regions, North West and North Central, account for 90 percent of crop production, South-South accounts for 92 percent of oil production, and South West (essentially Lagos and Ogun) account for 60 percent of trading and commercial activities, with North Central and South-South also contributing 30 percent of this.

In the absence of a grand plan to open up opportunities in every region of Nigeria, rich regions will continue to get richer and poor regions will continue to decline.

The reality is that some states/regions can achieve faster growth in the prevailing global economic and financial environment, while others will need to look inward and draw strengths from under-leveraged advantages; otherwise, states/regions with economic advantages are going to continue to get richer while the poor states/regions will get poorer.

Honing and Owning Competitive Advantage – Regional Integration is the Way to Go.

Fast and efficient rail links between rich and poor regions could bring resource-poor regions closer to needful inputs but a whole lot will depend on how fast States are able to bond together under a regional arrangement with the centre devolving more powers to the regions in order to allow regions leverage scale and scope advantage and by so doing, hone and own their competitive advantages. The centre will however need to continue to help with policies which create a better business environment and attract the investments needed to jump-start regional economies.