Advanced economies have one thing in common — Gross Domestic Product (GDP) fed by diversified revenue streams.
Like tributaries that nurture a river, the diversified product portfolios of nations contribute to their GDPs with increasing levels of export structure complexities.
Since the essence of diversification is to reduce the risk of “one bad apple ruining the entire basket”, such revenue architecture sustains economic stability in uncertain times in a globalized economy.
As an outlier to most diversified resource-rich nations, Nigeria operates virtually a monolithic economy — 90 percent of its foreign exchange is funded from oil earnings.
Such unhedged exposure to externalities can disrupt this “unique” revenue source with grievous economic outcomes.
A vivid reminder is Venezuela’s current peacetime economic crisis.
It validates the fact that living on a knife-edge oil-dependency is not a sustainable strategy.
Call it petrodollars laziness, Dutch disease or whatever label economists fancy, Nigeria’s export structure has not seen any appreciable change since the 1970s.
The culprit is the recalcitrance of past administrations to break an incestuous circle — immediate consumption of crude oil export earnings by an oversized acquired-taste imports yearly.
So, while Norway celebrates $1.5 trillion in savings from oil revenue, Nigeria celebrates a modest $2.3 billion.
Assuming the present administration opts to depart from the parroting of the diversification sing-song as was common to previous governments, what export baskets would be targets for development sprints to move the needle in diversifying revenue streams?
It would be wise to take a cue from nations that found enviable economic success by abandoning an unworkable export product mix; some target-industries were erroneously selected for development because of their seeming low-hanging fruits and regional competitive advantage.
A case in point is South Korea which changed its export product mix from labor-intensive textiles to electronics and machinery in the early 1970s and transformed its economy into the tenth largest in the world with a GDP of almost $2 trillion.
In other words, it makes long-term economic sense to be contrarian in picking product portfolio mix and increase investment in those sectors that may not conform to well-known models, but hold greater promise of transformational economic complexity down the road.
In the past four decades, Nigeria focused its diversification efforts rounding up the usual suspects of agriculture, tourism and solid minerals, with poor results.
Less attention is splashed on sectors like the blue or digital economies speciously perceived to be less “juicy” even as Nigerian artists and actors continue to dominate the world stage of global film and music industry, a sector which market size grew to $319.12 billion in 2022, more than 66 percent of Nigeria’s entire 2022 GDP of $477.4 billion.
