The illusion of economic diversification

The illusion of economic diversification
February 15 20:16 2016

By Prof. Andrew Efemini

[I] want us to address the above topic because there are widespread calls for government to diversify the economy as a way out of our current development crisis. The following points are crucial to our progress in understanding that Nigeria in its present form cannot diversify her  economy:

1. Diversification is an ideal, teleological, and pragmatic concept. I hate to be bombastic in my presentations but these concepts are very crucial to the issues we want to raise. I will explain them immediately.

2. It is an ideal because it has normative content. It is about a people’s ownership and control of multiple functional sectors of an economy. It is about engaging the energies of the people in multiple productive ventures. Diversification is an enemy to mono economies(single product).

3. Diversification is teleological because it is about moving an economy ultimately to the industrial stage. In modern global stage, diversification is about applying technology in a pervasive manner in national economies. In terms of end therefore it is about moving an economy from non- diversified to semi-diversified to ultimately fully diversified or industrialized economy.

4. Diversification is a pragmatic concept because it is about employment creation and sustainable development of a people.

5. Economists and management experts will tell and postulate the theories and principles of diversification to students and government. There are blame games when these theories do not lead us to desired goals. We them mention various monetary and physical measures needed to diversify the economy.

6. The World Bank, IMF, Central Bank, several other global and national players are part of this endless and fruitless efforts at diversifying the economy.

7. The fact today is that Nigeria’s economy still relies on crude oil for more than 80% of her foreign exchange earnings. All attempts to diversify the economy since 1914 has yielded infinitesimal results.

8. The major reasons why diversification is not possible for now are:

a. The structure of the present economy rests on a social and political structure which suffocates it. The size and structure of government cannot allow for d right volume of funds needed to truly diversify or industrialize an economy of 200million people.

b. Experts have put the prize of crude needed if the economy is to break even at $70 per barrel. Without corruption that is what we need to earn to run and maintain the Nigerian economy today.

c. Remember the Nigerian economy survives by underpaying workers, ignoring the poor and vulnerable. Through devaluation salaries and workers purchasing power are ruined.

d. The major reason why the economy cannot be diversified lies in our politics. A country with a war-like political culture with all d fatalistic trappings that we have cannot diversify her econom. Remember Nigeria is an insecurable society.

e. All insecurable societies cannot attractive enough foreign investments. Imagine Nigeria dreaming about foreign investments being the base of a diversified economy when there is either overt or subtle threat of violence in one part of the country or the other. Foreign investments are too sensitive to remote possibility of threat and avoid such areas.

9. Nigeria has a crisis of identity and cannot be a vehicle for modernizing her economy. There are centrifugal forces pulling the country apart through violence. Except these forces are re-aligned to our common vision we are wasting our time.

As we continue this dialogue it is important to remember that this posting is part of effort to address the expectation of Nigerians that one day a truly Great nation with diversified economy will come when the trap holding Nigeria has not been removed. Keep thinking.

Andrew Efemini is Professor of Philosophy of Development at the university of Port Harcourt