Governor Godwin Emefiele of the Central Bank of Nigeria (CBN) has stated that the discovery of oil is what exposed Nigeria’s economy to vulnerability.
While lamenting Nigeria’s dependence on crude oil revenues, Emefiele stressed that it has caused severe downturns in the agriculture and manufacturing sectors of the economy. He also stated that Nigeria’s dependence on crude oil has resulted in an over-dependence on a single commodity for survival.
More Details: According to the CBN boss, given Nigeria’s dependence on crude oil revenues for close to 86 percent of the country’s foreign exchange earnings and over 60 per cent of Government expenditure, the drop in prices in 2014 led to heightened inflationary pressures, depreciation of exchange rate, significant drop in external reserves, and eventually, the recession of 2016.
The neglected resolution: According to Emefiele, if Nigeria had maintained its market dominance in the palm oil industry which stood at 40 percent in the 70s, the country would be earning above $20 billion annually from the cultivation and processing of palm oil today. According to him;
“At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market. Some of these products include cocoa, groundnuts, cotton and palm oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians.
“Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival.”
Nigeria’s Palm Oil Production: According to the 2018 United States Department of Agriculture (USDA) data, Nigeria produced a total of 1 million metric tonnes of palm oil out of the 73.3 million metric tonnes global palm oil production in 2018.
The industry has, over time, witnessed a downturn with its contribution to global market share at a meagre 1.4% as of 2018.