Nigeria Must Find The Political Will To Liberate These Three Sectors

Nigeria provides the most dramatic example of how single commodity dependence can limit economic growth in the good times and cripple development in tough times. The Nigerian government, investors, the IMF and multilateral development banks – from the African Development Bank to the World Bank – agree on the need to diversify Nigeria’s economy. Consensus has been achieved on what needs to be done: diversification is necessary to more effectively distribute growth – and wealth – when oil prices are high, and sustain growth by managing balance of payments crises when prices are low.

While the jury is still out on how this can be achieved, agriculture and mining, along with servicing Nigeria’s growing urban middle class, are emerging as the most likely lead sectors to catapult Nigeria into sustainable, balanced long term growth.

Liberating these sectors to move Nigeria past the boom-and-bust cycles of oil-dependence, however, will take political will. Nigeria’s ability to place itself firmly on an inclusive and sustainable growth and development track lies in the hands of its policy makers. How legislators either empower or constrain investment in agriculture, mining and services over the coming years will determine how effectively Nigeria manages to diversify its economy and break with its oil-dependent past.


After many years of neglect, Nigeria’s agricultural sector is fast emerging as one of the most attractive investment opportunities on the continent. Policy allowing investors to buy large tracks of land is seeing innovation, infrastructure and logistics development in the food production, distribution and export sector. This is driving growth, creating jobs and bringing ever-more home grown food and agricultural products to both Nigeria’s growing middle class as well as global markets.

Yet the benefits of investment in agriculture is larger than just foreign earnings or domestic profits. While Nigeria derives over 80% of its revenue from the petroleum industry, the sector only accounts for approximately 14% of GDP. Agriculture on the other hand accounts for about 22% of GDP while providing two-thirds of Nigeria’s employment opportunities. Currently, about 90% of Nigeria’s food requirement is produced by small-scale farmers, who, ironically, constitute the majority of the nation’s poor. Nigeria, however, has the potential to be 100% self-sufficient in food production while also being a major global food exporter. It is currently estimated that sub-Saharan Africa’s population alone will reach 2 billion by 2050. Given that the world’s population is also expected to continue growing, the demand for food can only rise.

- Advertisement -

In short, Africa’s oil dependent economies, and especially Nigeria, should not miss this global demographic windfall to diversify their economies and transform the life-prospects of their people by supplying this ever-growing food market.

Legislation allowing larger scale farming and global investment across the agricultural value chain will help millions of Nigerians improve their lives through profitable farming and the growth of associated industries. Certainly, the key to transforming Nigeria’s agricultural sector is access to finance for Nigeria’s small-scale farmers, along with more certain land rights policy.

Once Nigeria’s farmers are able to access the finance to invest in basic farming inputs – such as seedlings, fertilizers, implements and irrigation – yields will increase. At the same time beneficiation and distribution industries can be developed throughout agricultures’ very long value chain as investors identify and leverage secondary opportunities.


Since beneficiation of minerals is best achieved in countries with large domestic markets able to afford beneficiated products, Nigeria’s vast natural resources and growing urbanized middle class should be attracting investment into the mining and minerals beneficiations industries – beyond merely the extraction and export of unprocessed oil and gas.

Nigeria’s government, through its Medium Term Expenditure Framework (MTEF) expressed in its Fiscal Strategy Paper (FSP) along with progressive local content legislation, recognizes that the development of a solid minerals industry provides an opportunity to deepen development by driving industrialization, especially the beneficiation of mineral resources.

Nigeria has proven deposits covering at least 44 known minerals, including; precious minerals, base metals, bulk minerals and rare earth minerals. Nigeria’s most promising mineral assets include gold, iron ore, barite, bitumen, lead, zinc, tin and coal. Despite this potential, Nigeria’s solid minerals sector has been operating well below capacity, with many mining operations manned by small scale capital-poor artisanal miners, rather than large scale cash-rich global players.

Nigeria should examine closely the reasons why, even during the recent commodities super-cycle, large global players along with their investment networks, skills, infrastructure and know-how were not attracted to Nigeria. Alternate streams of foreign currency aside, multiplier effects on job creation, development and social infrastructure that this kind of investment produces has the potential to position Nigeria’s mining industry as the main catalyst for national development.

Import substitution and balance of payments benefits aside, investment in iron ore mining, for example, has the potential to develop a domestic steel industry in Nigeria. Unlike South Africa, which is dependent of global sales, Nigeria has the growth potential, domestic population, middle class and infrastructure backlog to consume beneficiated iron or domestically for generations to come.

The good news is that Nigerian policy makers are increasingly recognizing – and moving to leverage – this vast potential. For example, Nigeria’s Petroleum Industry Bill, when passed, will re-invent contracts with international oil companies and change tax and royalty structures – effectively deregulating the Nigerian National Petroleum Corporation. This will, in turn, open the downstream sector to much-needed investment. This is expected to equip the local oil and gas sector with domestic production capacity and infrastructure, growing GDP and spreading wealth by providing new skills and jobs.

In Nigeria, the public sector has historically designed, funded, and executed mineral development projects. These projects, conceived with the best intentions, have often suffered the inefficiencies characterized by poor funding or ineffective deployment of skills and technology.

By allowing the private sector to bring global funding, skills and networks to Nigeria’s mining and minerals beneficiation sector, Nigeria has the potential to rapidly diversify its economy, create alternate sources of foreign investment, share wealth more effectively and deepen long-term social and political stability.


Servicing Nigeria’s growing middle, and largely urban, class presents a universe of opportunities for the diversification of Nigeria’s economy. One of the greatest advantages of a large and growing middle class is that it can afford to pay for services. As such, the larger your middle class the greater the ability it has to fund the development of its own infrastructure.

As such, Nigeria’s growing middle class is opening up investment opportunities in, amongst others, energy, infrastructure, financial services, telecommunications, urban development and tourism services. Significantly, delivering services across all these industries to a growing middle class requires infrastructure.

One of the often-cited obstacles to doing business in Africa is the continent’s infrastructure backlog. For instance, according to the Africa Development Bank, road access in Africa is only 34%, compared with 50% in other developing regions. The continent’s average national electrification rate is 43% compared with 81% in developing countries in Asia, and 98% and Latin America.

The World Economic Forum says an estimated $93bn will be needed annually until 2020 to close the infrastructure gap. While this is certainly a challenge it is also a great opportunity. As legislation encourages more investment – through public-private-partnerships and eventually outright ownership of infrastructure and other services in Nigeria – more development finance and private capital (including global capital) will become available to the country. In the process, huge opportunities are likely to develop for, firstly, local and global engineering and construction companies. As infrastructure expands the myriad of services that can be delivered through infrastructure – like logistics, electronics, advanced consumer products, education and entertainment – will all start attracting capital, providing further opportunity.

Standard Bank’s own experience is showing just how much opportunity Africa offers over the longer term. A lot has changed over the past few decades. Many countries, including Nigeria, now hold regular and democratic elections. Literacy rates and education have improved measurably. Africa now has the most youthful population in the world.

These demographic, institutional and political trends will, on their own, help to diversify Nigeria’s economy. Service supply chains, however, need sophisticated levels of technological and knowledge-based support.

Supporting the development of a sophisticated service sector with market-friendly policies will speed up growth, job creation, political stability and economic growth. As such, supportive regulatory frameworks enabling private sector participation in services are expected to distribute wealth creation – and wealth – more broadly in Nigeria.

In a nutshell, agriculture, mining and services have the potential to drive rapid transformation of Nigeria’s economy and development prospects. Stanbic IBTC’s deep understanding of Nigeria’s economic landscape and Standard Bank’s experience enabling real growth in Africa, coupled with its readiness to deliver the requisite funding, project finance, advisory services and expertise; combined with Nigeria’s renewed drive for a diversified economy, undoubtedly are important ingredients in the recipe to transform Nigeria’s economy and the socioeconomic status of its teeming populace.

Bolatito Ajibode, Head, Conglomerates & Industrials, Stanbic IBTC. Original article published by

- Advertisement -