Contribution of Non Oil Exports to Economic Growth in Nigeria (1985-2021)
Background to the Study
Economic theory has established that foreign trade creates an avenue for foreign capital to flow into an economy (Ricardo, 1817). This is especially so when the value of exported goods of such an economy exceeds the value of the imported goods. Exportation is therefore needed by an economy to boost revenue and usher in growth in the economy. Adenugba and Dipo (2013) asserted that when the demand for exports is high more production is required, this therefore creates more employment, raises national income and also helps attain a favourable balance of trade and balance of payment position for the exporting economy. This underlines the importance of exports in the growth of an economy.
The Nigerian economy relies heavily on foreign trade for growth (Adenugba & Dipo, 2013). During the pre-independence era to the late 1960s the economy was driven majorly by agricultural products and a few other solid minerals. However the discovery of crude oil in abundance, the boom in the oil market and the relative high price enjoyed by the product made the country to totally rely on the oil sector as the chief source of foreign earnings and abandon all other sectors that contributed to foreign earnings for the economy. This is a classic example of what economic scholars referred to as the “Dutch disease” a scenario where a natural resource boom triggers a process of de-industrialization (Bature, 2012). The de-industrialization triggered also made Nigeria a consumer goods import-dependent economy as it cannot internally produce enough consumer goods due to neglect of the industrial sector. Enoma and Isedu (2011) pointed out that Nigeria, since the 1970s has been a mono-cultural economy relying heavily on oil as its major income earner. For instance, from 1970 to date, oil
exportation has constituted on the average 90% of the total foreign exchange earnings (Akeem, 2011). The implication of this is that the dynamics of the economy is at the whims and caprices of the price of oil, which for the most part, has been volatile. Omjimite and Akpolodje (2010) also asserted that the dependence of Nigeria on crude oil exports has serious implications for the Nigerian economy since the oil market is a highly volatile one. For example, being dependent on the export of crude oil, the Nigerian economy is subject to the vicissitudes and vagaries of the international oil market such that international oil price shocks will immediately be felt in the domestic economy. The adverse consequences of over dependency on oil trade heightened the need to diversify the Nigerian economy away from oil towards the direction of non-oil export trade. It is believed that the non-oil trade has great potentials to propel the Nigerian economy to the desired growth and development. For instance, Onwualu (2012) maintained that the value chain approach to agriculture alone has the potentials to open up the economy and generate various activities which are capable of creating jobs and enhancing industrialization and thus makes the non-oil sub-sector to hold the aces for future Nigerian sustainable economic growth. Imoughele and Ismaila (2015) noted that expanding non-oil export to get rid of one-product economy has been known as a solution for economic development in oil producing countries of which Nigeria is one and also the sixth largest oil producing and exporting country in the world. However despite’ government various efforts to grow the non oil exports, the growth performance of Nigeria’s non-oil exports is perceived to have been very slow. For instance, Ogun (2004) stated that non oil exports grew at an average of 2.3% during the 1960 -1990 period, while its share of total export declined from about 60% in 1960 to 3.0% in 1990. This therefore makes it imperative to find out if non oil contributes to economic growth and to what extent has non oil exports contributed to the growth of the Nigerian economy