REVITALIZING NIGERIA THROUGH DIVERSIFICATION OF HER ECONOMY
1.1 Background of the Study
The easy definition of revitalization is the process of a city or neighborhood improving after being undesirable experience.
But a good definition turns out to be hard. It’s hard to define when a place needs revitalizing and hard to define what that means even when everyone agrees that it is happening.
According to the oxford advanced learner’s Dictionary, Revitalization is to make something stronger, more active or more healthy.
In 1956, Anthony F.C. Wallace published a paper called ‘’Revitalization movements’’ to describe how cultures change themselves. A revitalization movement is a deliberates, organized, conscious effort by members of a society to construct a more satisfying culture, and Wallace describes at length the processes by which a revitalization movement takes place.
Wallace’s model 1956 describes the process of a revitalization movement as follows:-
i. period of generally satisfactory adaptations to a group’s social and natural environment.
ii. period of increased individual stress while the group as a whole is able to survive through its accustomed cultural behavior, changes in the social or natural environment frustrate efforts of many people to obtain normal satisfactions of their needs.
iii. period of cultural distortion; changes in the group’s social or natural environment drastically reduce the capacity of accustomed cultural behaviour to satisfy most person’s physical and emotional needs.
iv. period of revitalization: (i) reformulation of the cultural pattern (ii) its communication (iii) organization of a reformulated cultural pattern (iv) Adaptation of the reformulated pattern to be better meet the needs and preferences of the group (v) cultural transformation (vi) reutilization, when the adapted reformulated cultural pattern becomes the standard cultural behavior for the group.
v. new period of generally satisfactory adaptation to the group’s changed social or natural environment.
Nigeria is a middle income, mixed economy and emerging market with expanding financial, service, communications, technology and entertainment sectors it is ranked as the 21st largest economy in the world in terms of nominal Gross domestic product (GDP) power parity. It is the largest economy in Africa, its re-emergent, though currently under performing, manufacturing sector is the third-largest on the continent and produces a large proportion of goods and services for the West African sub-region.
Nigeria recently changed its economic analysis to account for rapidly growing contributors to its Gross domestic product, such as telecommunications, banking and its film industry.
It is usually argued that corruption at home is primarily responsible for Nigeria’s plight, while disregarding the part her supposed allies play in under developing her economy. This doesn’t exculpate Nigeria’s past leaders from corruption, It only points out the hand work of her allies through main stream economics in worsening her already battered situation. So much illusion was created by the west by constantly convincing its leaders and populace that growth is actually recorded in the economy.
Growth of GDP (Gross Domestic Product) is greeted with much brouhaha. The value of FDI (Foreign Direct Investment) hitting an all-time high has become the bastion of government in concealing its ineptitude in the control and management of the economy. These and many more yardsticks about gains or dividends of the growing economy are emphasized. Unemployment ranks higher than at any other time in the economy, indigenous participation in the economy is at the lowest ebb. Continual devaluation of the currency, which portends weak purchasing strength, is like a recurring decimal. Absolute dependence on impartation of its consumables is a head – ache and empowerment of her citizen and massive industrialization is virtually non-existent.
The bail – out or loans granted her by her friends are unreality to produce economic enslavement. It has always given the western world a great deal of dominance or ministration. A great doom await Nigeria (and all Africa) if she doesn’t take a volte-face on her policies. The western countries have plunged their European counterparts into recession by reneging on signed pacts and by instilling a pragmatic approach to individual nations of European union. If these policies have already had disastrous consequences on other western nations, how much more doom will now be foisted on the black world especially Nigeria.
The powerless and helpless state of the ‘’too –big – to fail’’ nations is obvious. As loans or bail – out accorded the country during their now – past days of prosperity leaves each country scrambling to re – adjust, manage and fast – track their own economy. Nigeria must take a headline stand on some of the policies forcefully foisted on her if she is to undergo transformation and break the barriers of underdevelopment to fast track the much needed transformation her citizens aspires to.
Whenever it is proposed that a bait – out or loan is to be received by the third world countries, it should (under proper circumstances) be greeted with loud ovation, unfortunately, in this flawed world, this is instead the time for more economic servitude on the part of the recipient while it is a form of economic hegemony on the side of the guarantor. Bretton Woods institutions like He world bank and the international monetary fund (IMF) play the scripts of the western orthodox approach to economics, so that the phrase ‘’bail – out ‘’ actually means ‘’hegemony’’.
For the past two decades and still counting, the world bank and the IMF have forced developing countries in creating conditions that are of immense benefits to west economically under a scheme known as the Structural Adjustment Programme(SAPS).
For third world countries aspiring for development, the Bretton Wood institutions act as a barricade against development.
Bail outs would have been helpful to the third world countries, if there is no stringent conditions attached, unfortunately, of trade restrictions, privatization and removal of subsidies by government of the third world which further impoverished the masses and open up the economy of Nigeria for an unlimited trade and market. These stringent conditions in most cases are sinequanon for securing loans or relief. This means that bail – out are only a smoke screen for actual dominance by the west. (Bilbow. J. 2012)
Since the amalgamation of the southern and northern protectorates by sir. Lord Lugard in 1914 till the 1960s, agriculture was the main stay of her economy. Nigeria was not indebted nor was it dependent on the west for bailout. The agrarian status of the Nigerian economy changed with the exploration of the oil discovered at a place called Oloibiri, Bayelsa state in 1957. These helped the government from growing broke as the sale of oil was instrumental in prosecuting a three year civil war without borrowing external aid. This feat of oil discovery with its exploration appeased to be a blessing initially but turned into a curse when during the oil glut of 1980, the comparative advantage she had in oil had waned. Nigeria’s diminishing participation in agriculture and over-reliance on oil exploration for active or over-reliance caused the fall in the price of oil at the international market. This in turn, led to a balance of payment deficit in the 80s as revenue from oil had become the primary source for budgetary planning. Having established an over – sized, bloated government which of the embarked on white elephant projects, Nigeria couldn’t run her day today activities in balanced manner oil revenues fell from 42 percent in two years as the price of crude collapsed from $40.97 a barrel in December 1980 to $28.25 in March 1982. The search for foreign loan became inevitable.
Muhammadu Buhari, after overthrowing the Shagari administration (based on the pretext of combating greed and corruption and righting the ailing economy), began an advanced negotiation on a proposed IMF bailout for the comatose economy. (FawoleW.A. 2003).
Negotiations between the IMF and dis agreement on the conditions the tending institution attached to the loan facility. Dr. OnaolapoSoleye2009, the then finance minister, scrupulously per used the conditions attached to the loan facility, which were:-
· Curtailment and review of public expenditures
· Reduction of government subsidies
· Stoppage of non – statutory i.e transfers such as loans to the state government
· Simplification and rationalization of traffic structure
· Review of interest rate
· Relaxation of import restriction
· Devaluation of the naira
· Vigorous export promotion
And then concluded that securing the loan connoted a poisoned chalice to the economy.
General Buhariresolutely insisted that at least three of the conditions (removal of petrol subsidies, naira devaluation and relaxation of trade restrictions) were unacceptable. With the IMF obstinately insisting on their conditions, Buhari stated agreeing these terms was politically suicidal. He said, we have realized, the damage IMF loans had done to developing countries. None of its developing countries that had taken IMF loans had came out of it well, going by historical indication to take IMF loans on the terms they want us to, will be tantamount to virtually destroying our own country. Devaluation does not make sense to Nigeria at all.
Ikejiaku B.V. (2008) said that, the regime of Ibrahim Babangida was like a loosening of the asphyxiating stranglehold experienced by politicians during the Buhari regime with the way and manner he gave corrupt politicians a soft landing through presidential pardons. He also started the negotiation on the proposed IMF loan throwing the matter into a court of public opinion. Being an innocuous imposter and deeply Machiavellian, Babangida threw caution to the wind by accepting IMF’s conditions for securing the loan. It removed government involvement in fixing the value of natural currency and initiated the structural adjustment policies. This caused untold hardship for the citizens. Unemployment automatically rose. Local industries were closed up because of the relaxation on import restrictions making foreign goods cheaper and locally made gods unable to compete.
Despite securing the loan, there were problems. There were persistent current account and budget deficits, a huge backlog of uncompleted projects (especially in the public sector), factory closures and large scale galloping inflation, which shifted economic growth. External loans from the ICM which became significant in the early 1980’s carried high and floating interest rate usually tied to the LIBOR which itself escalated from to 13 – 0 barely 3 -4 percent in the late 1970s to 13-0 percent in 1989. Moreover, the rest functioning which was undertaken did not give sufficient breathing space and therefore made the servicing of the debt difficult , an arrear of principal and interest and recapitalization to further compound the debt situation. The rescheduling made debt service as the stock of debt to increase.
For instance, the original value of Nigeria’s external debt which was $18.9 billion in 1985, increased to $35.9 billion as at 31st December, 2004. In spite of cumulative debt service payments of about $36.6 billion during the same period. Ogunlana, 2004 said that Nigeria was granted debt relief during the Obasanjo civilian regime that helped break the ice on servicing debt and play for debt cancellations. It is still rather disturbing that after receiving debt relief the country that after receiving debt relief the country continues borrowing without any lasting positive results to show for it. In 2009, Micheal peel have a sterling account of t he paths of inter- national finance institutions (IFIs) played in impoverishing the Nigerian economy by giving stolen proceeds a safe heaven in their respective countries. Enrico Monfrini, the lawyer charged with recovering the stolen assets for the Nigerian government, placed enormous glutton the west financial institutions as accomplices in corruption.
According to Monfrini, the asset recovery was to place a bait for stronger evidences of aiding and a belting of illegal fund to the western authorities. This was swallowed by the Swiss authorities which then, having gone through the nagi gold scandal, issued alerts to hundreds of banks confirming the authenticity of the accounts which had government money siphoned by Nigeria’s former Head of state, General Sanni Abacha. He said the suspected money laundering appeared to involve at least half a dozen countries on three continents leading to changing in currency it was held before. With much resilience and commitment on the path of Monrifini, a great stride was achieved which include repatriation of $500m from Switzerland in 2004 and $160m from jersey in 2003. All recovered loot stood to the credit of 12bn by early 2009. The basic banking practice of the western financial system disregarded by providing sustained dictatorship around the world. The role of internationals banks in facilitating these kinds of transactions has become something of a célèbre. (Micheal peel, 2009). After studying the official state documents, the New York Times reported that the state poverty eradication committee received a little more than half of what was spent on toiletries for state officials between 2002 and 2005m the state had spent more than $20m $11.5m of this sunk in four properties in London. At the time of this financial madness, Joseph, a London based attorney, made allegation that the former governor paid €6,100,000 of Bayelsa money in actual tranches into five bank accounts in the name of each of his children. Mr. AlamieyeSieghachose not respond to the claim, Having been aware of this started illegality and subversion of ethical practices, the state and banks agents involved were undeterred in their dealing with the governor, showing lack of probity on the path of financial institutions focused on their gains as trustees of the trustor while ignoring the manner the trustor acquired the trust.
Although dependence on foreign loans might have diminished with the issuance of government bounds in funding deficit, the country continually depends on the west for foreign direct investment and privatization of her enterprises.
The too-big-to-fail economics that collapsed like a pack of cards caused a global recession. The reason for their collapse is enunciated in the maladjustment of their respective economics.
Recession or meltdown occurred way back in 1929 – 1939 and timely measures then solved the problem of recession, that the world experienced and economic meltdown during the 2007 – 2008 years does not spell a permanent doom to the economic prosperity (despite the fact that prosperity achieved prior to the latest economic meltdown were rooted financial speculations) it may be necessary to ask for a hard-line solution to the economic malady the 2008 global recession caused.
Before, the bubble burst, the wealthiest (especially in the US economy which is the prime mover of global economy) saw their income rise as never before. The Eurozone and European union disregarded banking ethics. The result of these unethical banking practices has been catastrophic. The global economy is on its knees. The unemployment rate in the west has risen. Economic contraction has replaced expansion. Jobs are outsourced like never before to cheap labour and consumer spending is low, which in turn has caused social security for the unemployed to sky rocket. All these without announce of doubt pretend little revenue for government and high expectation for government on the part of citizens.
The west is going through all facets of reforms, belt macro-economics or micro – or even foreign economy, to get herself out of economic quagmire. It would amount to torn foolery to posit that a man in danger of drowning would simultaneously be able to rescue another man in the same dilemma. For a capitalist mode of economy, it’s all about exploitation, moving and swerving to where labour and raw materials are cheap. that presupposes that ordinarily the failure of one should be at the advantage of the other.
The loss of jobs at the U.S economy was the precursor of economic meltdown, job growth and availability for the U.S then, which was a decade before 2007 – 2008 financial recession was starkly insufficient for growing population. Manufacturing industries were leaving her shores for developing economies, jobs were outsourced, (capitalism would disregard theory of consideration for aim of greed ) she brought out a policy in issuing a tax wealthy even when foreign policies were draining her economy. Banking was greed and it enunciated in its attempt for making super – abnormal profit while forsaking nobility.
Globalization in tandem with trade market could be detrimental to economies, an example of the European Union fits into this as European banks had provided and important helping hand in sponsoring the U.S housing bubble of the 2005. It was later made clear that European banks had behaved recklessly in their gamble in foreign lands by tolerating a huge short dollar position that was outside the purview of the European Central Bank and the U.S Federal Reserve (Bilbow, 2012).
When a bank or insurance company has about 50% of its capital wiped out, it becomes technically insolvent and chronically liquid.
The policy of fixing an individual nation’s economy should be fully operational as United States which controls world economy run a deficit in budget due to massive stimulus packages pumped in to automobile industry to reduce unemployment rate. The structure has created the huge deficit that got her president thinking about reducing the huge deficit disallow passage of debt burden to future generation. Policies to bring jobs back to the U.S economy are underway with loads of incentives and tax rebates ready to be offered.
Decrease in defense budget of the U.S. (which is greater than the cumulative amount spent by the rest of the world) is under way for the redistribution of spending to domestic and pivoted areas of her economy. Foreign diplomacy has been made the window of opening up of economic trade for more export for the U.S. economy. The bilateral agreements are a segue of emphasis from defense to economic trade. If the mighty U.S. economy is preoccupied with all its efforts to bounce out of its own economic recession, then other nations (especially Nigeria) who are ready to kow tow to us whims and fancies are suffering from illusion if they expect the U.S to bail them out.
The U.S. is quite effective in bailing countries out, when she had the power (during the hey days of budget surplus and economic prosperity) she decided to offer exploitation as a sinequanon for exploration.
The need for evaluation that the proof of the western economic maladjustment with the inherent doom caused by her own making is enough to promptly accept the western malady. The U.S is trying to regain her lost power of economic dominance with implementation of a new industrial repatriation policy embarked on and also to urge deficit spending to keep unemployment rate falling to a considerable level, it is therefore plausible that aid accorded to Nigeria within this period of economic re-appraisal would be far less than previous, if any is to be obtained. Even in times of economic prosperity, it was to what the appetite of government and provides the keys for economic diversification in Nigeria’s. The growing concern of the United States about Nigeria and her security challenges, have been of economic interest.
Continual repetition of same methods will continually produce the same outcome. Nigeria’s economic potential endowment has been made unrealizable in terms of greatness due to the in aptitude on the path of government.
The government holds the key to any diversification of her economy. The government should make this its point in its day-to-day activates. Unfortunately, leaders of today have double standards and double speak, They talk but do not walk the walk, more to acquire little. They make new laws to break existing ones, all in a bid to carefully navigate troubled waters or to satisfy greedy and avaricious intentions.
Diversification from oil as the foreign exchange of the country to other sources is of utmost importance. Oil is no longer a comparative advantage of oil in other African countries, means its dependence is overdue.
Diversification is needed for continual relevance. Exploitation of underutilized human resources should begin forth with Nigeria has a lot of natural resources she jettisoned in pursuit oil, which is eventually becoming a glut with dwindling price at the international market. Continual budgetary preparation promised on its price at the international market was quite suicidal. Our comparative advantage is buoyant labour size, good weather and natural resources.
1.2 Statement of the Problem
It has been observed, that the oil beam which would have been an enduring blessing to Nigeria has regrettably necessitated a great shift of attention to oil money, which resulted in a total neglect boom and euphoria led to the establishment of new urban cities that necessitated mass exodus of able-bodied men and women from the rural areas to the cities in search of white-collar jobs and quick money. This development drastically reduced interest in agriculture and the agrarian economy. Agricultural sector has been the leading provider and seventies, when the sector provider of employment in Nigeria since the sixties employment for more than 70 percent of the Nigerian population. Unfortunately, in the awake of oil discovery, the attention on this sector of the economy was gradually and myopically shifted to the oil sector where employment opportunities were very low and the traditional agricultural exports have been on a progressive decline. Regrettably, this has given rise to acute unemployment as oil sector could only employ limited number of the population and worse still, only experts.
Apart from the progressive decline in agricultural sector, human resources management has also suffered from years of neglect as a result of the same oil boom in Nigeria.
Todarn and Stephen (2006) made it plain that in the realm of human resources and economic growth of a nation, sheer numbers of people and their skill levels are important, so also are cultural outlooks, attitudes towards work, access to information, willingness to innovate and desire for self-improvement.
The poor management of human resources in the country has assumed an unprecedented level. The preponderance has contributed to brain drain which led to the loss of highly educated and skilled manpower and high dependency ratio among the Nigerian youth especially among university graduates who migrate to seek better life in developed nations of Europe and America.
1.3 Objectives of the Study
The broad objectives of this study are to examine revitalizing Nigerian economy through diversification of her economy
The specific objectives are:-
i.) To find out the importance of diversification in the economy of Nigeria
ii.) To examine the reason for revitalizing the economy of Nigeria
iii.) To investigate the effect of Nigeria's economy.
iv.) To discuss the challenges facing diversification in the economy of Nigeria
v.) To look into the rate of unemployment in the Nigeria economy
1.4 Research Questions
The following relevant questions will be of great assistance to this research;
i.) What is the importance of diversification to Nigeria’s economy?
ii.) Why does Nigeria need revitalization?
iii.) Can diversification help in the growth and development of Nigeria's economy?
iv.) What are the challenges facing diversification in Nigeria's economy?
v.) Will diversification reduce the rate of unemployment in Nigeria's economy?
1.5 Scope of the Study
This research study is designed to find out how Nigeria economy can be revitalized through diversification of her economy.
It will also cover the agricultural sectors of the economy. This study cannot be extended to other sectors of the economy of the country because of the non-sufficient time available to this research study.
1.6 Significance of the Study
The findings of this study will help in the need for revitalizing Nigeria through diversification of her economy and the appreciation of the problem be-setting diversification
It will also make the government more aware of their short coming and possible way of correcting them.
In addition, it is envisaged that the findings of this research study and the various recommendations based on it would be taken by the government for successful attainment of its goals of revitalizing Nigeria through diversification of her economy..