CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Nigeria is largest oil exporting country in Africa and has a rapidly growing economy. The country follows a resource based growth strategy driven by the production and exporting of oil. With the volatility of global oil prices and often volatile growth of Nigeria’s economy, the country has wasted much of its opportunities to break away from underdevelopment despite its massive natural and human resources endowments. It has dwelled only on its huge crude oil resources as the major source of revenue, driving a monolithic economy for years in spite of the enormous developmental challenges it faces (Ojo, 1994). Regrettably, the oil resources are being mismanaged and a substantial part of it has gone on rent seeking and red-tapism common in Nigerian bureaucracy. For more than a decade now, Nigeria has been enjoying high levels of economic growth, human development, and relative political stability. As it continues along the path of economic progress, it is imperative that the country finds ways to diversify its economy by boosting non-traditional sectors, expanding its range of products for exports and engaging new economic and trade partners. The economic nerve centre of Africa shifted northward this year when Nigeria took South Africa’s long-held position as the country with the continent’s largest Gross Domestic Product (GDP). While GDP neither reflects the wealth distribution nor accounts for the size of the population, it is a significant indication of Nigeria’s emerging economic power. If these growing resources are invested intelligently, the country can benefit and exceed the International Money Fund’s estimated GDP growth of seven per cent. As a matter of priority, Nigeria government must encourage the diversification of Nigeria’s economy (Jonathan, 2013). It is the only viable way to survive the current environment of global economic uncertainty with the volatility of oil price. It is crucial that government do not believe that oil provides an endless source of revenue. At the advent of democracy in 1999, Obasanjo’s first full national budget in 2000 was under N600bn naira but now we have as much as 800% increase over this, yet we can only see little development but surplus of preaching’s and governance by billboards while vision 20-2020 is in a state of rest like Newton’s first law of thermodynamics. We say unequivocally that resource looting and wastage is much concentrated at the state levels, because most of our Governors are not just most wanting but problematic and the very impediment to development. Diversification presents the most competitive and strategic option for Nigeria in light of her developmental challenges and given her background. Diversification has a lot of benefits for Nigeria to maximally utilize her abundant resource – base to rebuild the economy and enjoy the benefits of all the linkages, synergy, economies of scale, grow national technology and foreign investment profile, build human capital, exploit new opportunities, lessen averagely operational costs, increase national competitiveness and grow the standard of living and confidence of the citizens for national renaissance.
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