| There is bad news for oil exporters to the United | | | | Reinforcing the financial sector with the 2004 bank |
| States. Earlier in September 2009, the administration | | | | consolidation programme to improve credit access to |
| of President Barack Obama indicated its readiness to | | | | the private sector, specifically, small businesses. |
| lower US overdependence on oil as part of efforts | | | | Privatising major public sector entities in oil production |
| to cut down on emissions and develop a | | | | and marketing, construction, mining and ports to |
| clean-energy economy. Nigeria, with proven crude | | | | promote private participation and downstream |
| reserves in excess of 36 billion barrels as of 2007, | | | | enterprise development. |
| supplies 10% of USA's annual oil demand. The new | | | | Reduction of government expenditure and |
| rhetoric from Washington, which is the top importer | | | | involvement in direct economic production through |
| of Nigerian crude, could not have been more | | | | commercialisation, disinvestment and strategic |
| devastating to the sub-Saharan nation. | | | | mergers. |
| | | | | Encouraging venture capital over debt by providing |
| The Nigerian economy is overwhelmingly dependent | | | | extensive tax relief and financial incentives to foreign |
| on oil, which accounts for 81% of government | | | | private equity investors in key areas. |
| revenue and more than 97% of export earnings. | | | | Increasing focus on traditional activities like fishing, |
| Myopic policies pursued by successive military regimes | | | | mining and agriculture that have considerable potential |
| in the final decades of the last century devastated | | | | for entrepreneurial growth. |
| the traditional agrarian economy and crippled growth | | | | Improving business skills and vocational training, most |
| in non-oil sectors. Consequently, Abuja's growing oil | | | | notably by making entrepreneurship education |
| wealth corresponded with a simultaneous decline of | | | | mandatory at the college level. |
| human development indicators and widening | | | | |
| urban-rural divides. Massive imbalances in the | | | | While it may be too early yet to discuss the extent |
| economy spawned a thriving informal sector that | | | | of success these measure have met with, it is clear |
| continues to sustain most of Nigeria's 148 million | | | | that the Nigerian economy has not diversified to |
| people. Although they contribute over 40% of the | | | | expected levels. This is convincingly borne out by the |
| combined Western African GDP, Nigerians rank | | | | fact that even after a decade of multifarious |
| among the poorest people on the planet. | | | | reforms, more than half of all industrial raw material |
| | | | | and consumer goods continue to be imported. Non-oil |
| The fundamental problem with the Nigerian economy | | | | exports remain marginal while growth in potential |
| is its failure to diversify. Instead of investing oil | | | | boom sectors like tourism and textiles is sluggish. The |
| revenues in multi-sector economic growth or poverty | | | | dynamic economy running on rapid enterprise |
| alleviation, past governments frittered away national | | | | development that Nigeria is desperate for remains |
| profits through unsustainable import reliance and | | | | patently unachieved. |
| corruption. The resulting fragility has been clearly | | | | |
| evident over the last year as the global economic | | | | Some of the major hindrances on the way to a |
| downturn severely impacted every aspect of the | | | | more interlinked entrepreneurial economy are: |
| Nigerian economy – from banking and foreign | | | | |
| exchange reserves to the capital market and the | | | | Low productivity in small-scale operations due to the |
| mortgage sector. Reforms introduced since 1999 | | | | wide prevalence of outdated technologies and |
| have produced encouraging results – most | | | | business practices. |
| prominently, the revival of agriculture which now | | | | Lack of socially relevant diversification models that |
| contributes 42% of GDP. However, and although an | | | | optimise locally available resources and raw material. |
| estimated two-thirds of the population are dependent | | | | Predominance of stand-alone industries with little or |
| on it for primary livelihood, Nigerian agriculture, like | | | | no backward links to the local economy. |
| many other potentially high-growth sectors, continues | | | | The presence of a huge and thriving informal sector |
| to be a labour-intensive and low productivity | | | | that operates outside the domain of government |
| operation. | | | | regulation. |
| | | | | Massive infrastructure shortfalls in power and |
| Curiously, Nigeria is better placed to develop a | | | | transportation that severely deter the evolution of |
| well-diversified economy than possibly any other | | | | small businesses. |
| country in Western Africa. The abundance of natural | | | | Rooted popular mindset against equity partnership |
| resources, mineral deposits and fertile land it enjoys is | | | | and the overriding insistence on debt finance. |
| unrivalled, as is its substantial human resource pool. A | | | | Poverty, social unrest and violence that suffocate |
| range of initiatives devoted to promoting other | | | | financial aspirations and blight market innovation. |
| sectors of the economy is already in place as part of | | | | |
| the government's extensive reforms programme. | | | | The challenge of economic diversification is not limited |
| The non-oil economy saw two-fold growth to 7% | | | | to the developing world. Prosperous nations too have |
| between 2001 and 2006, an encouraging sign in view | | | | been forced to come up with creative policies |
| of Nigeria's Vision 2020 goal of accelerated growth | | | | designed to reduce dependence on traditional sectors. |
| and economic consolidation. Optimising resource and | | | | The oil-rich emirate of Saudi Arabia, which is well on |
| raw material utilisation by developing a mass base of | | | | the way to reinventing itself as a luxury tourist |
| interlinked enterprises is central to this scheme of | | | | destination, is a striking example. Norway, the world's |
| things. | | | | top crude producer after Saudi Arabia and Russia, |
| | | | | has likewise expanded its economy out of |
| Given past experiences and present realities, Nigeria's | | | | petrochemicals by establishing successful supply and |
| resurgence is inseparably tied to business expansion | | | | service industries. These examples serve to bring out |
| in the small and medium sector. SMEs have proved | | | | the heightened imperative for diversification that |
| reliable vehicles of economic transformation across | | | | rests on oil-dependent economies, irrespective of |
| the developing world because of the wide scope of | | | | their size. |
| their benefits – employment generation, foreign | | | | |
| exchange conservation, optimal resource utilisation | | | | If a British Petroleum report is to be believed, |
| and equitable wealth distribution. The most convincing | | | | Nigeria's oil reserves are set to run out before the |
| benefit of all, however, is the interdependence | | | | end of 2030. Even if further reserves are explored |
| among businesses that SMEs foster – a critical | | | | over the coming years, the eventual decline of |
| consideration in the context of Nigeria's long term | | | | oil-driven economic might is without doubt. Nigeria's |
| ambition. | | | | future standing on the world stage is therefore |
| | | | | unquestionably dependent on developing a flourishing, |
| Recent efforts by Abuja to promote a more | | | | multi-faceted and interdependent enterprise |
| interlinked enterprise economy include: | | | | economy. |
| | | | | |