Who moved our cheese?

Decline in oil price (and subsequently, government budgets) often predates economic decline in Nigeria. Proposed states and federal budgets for 2015 confirmed this position earlier this year.

In 2014, 33 of Nigeria’s 36 states budgeted higher than what they spent in 2013. But in 2015, only 9 states had higher budgets compared to what they spent in 2014. (27 states budgeted considerably less than what they spent in 2014 for 2015.)

While state budgets rose by 13 percent in 2014, they dropped by 5.3 percent in 2015. The federal budget for 2015 rose by only 4.3 percent over what was spent in 2014, which amounted to a considerable drop compared to the 2013/2014 period.

Diversification or competitiveness, which is Nigeria’s problem?

It is at best unfair to say that the Obasanjo, Yar’Adua and Jonathan administrations did nothing to diversify the Nigerian economy. The structure of the Nigerian economy has in fact changed remarkably since 1999.

In the last four years, the agric and oil sectors which used to occupy commanding heights in the Nigerian economy shrank relative to other sectors.

In the last two years agric sector contributed an average of 22% of GDP; industries and services contributed 24% and 53% of GDP respectively (oil and gas contributed much less). The reality is that the process of diversification has no end, it only has a beginning.