Nigeria’s GDP Illusion and How Oil & Gas Distorts Our Perceptions

Daily, we talk of oil in Nigeria. But in the real scheme of things, crude oil is a small part of our existence. Yes, oil and gas sector brings in less than 5% to our GDP composition:  “The non-oil sector contributed approximately 95.30% to Nigeria’s GDP in the last three months of the year. Key industries such as finance, telecommunications, agriculture, trade, construction, manufacturing, and real estate have been instrumental in driving this growth.”

Of course, when it comes to foreign earnings, oil & gas flips things, hitting excess of 80%. It is like this, using villages to illustrate:

Village A: 1000 employable people live here, but only 10 people have good oil & gas jobs and are paid very well. Another 30 have yoyo kind of jobs and barely make progress. However, at the end of the month, the village has $10 million in their bank account, largely generated by the 10 people. That fund is mismanaged by 5 people who serve as village managers. With limited economic activity, GDP (aggregate of economic activities towards production of finished goods over a period of time) is $100m as most people do not have jobs.

Village B: 950 out of 1000 employable people have average jobs and can generate just $1m monthly in the bank. Most people here are involved in many sectors with massive economic activities; GDP is $300m and employment is full.

Nigeria mirrors Village A where the magic of oil earnings triggers many economic optical illusions. It is key to note that agriculture remains the LARGEST contributor to Nigeria’s GDP, and the most important sector to anchor improved welfare and prosperity to most communities!

(Of course, oil & gas is invaluable; Nigeria just needs to get deeper into petroleum, chemicals, refining, etc to deepen the GDP contribution of the broad sector)

Daily, we talk of oil in Nigeria. But in the real scheme of things, crude oil is a small part of our existence. Yes, oil and gas sector brings in less than 5% to our GDP composition:  “The non-oil sector contributed approximately 95.30% to Nigeria’s GDP in the last three months… pic.twitter.com/eN43PneHdx

— Ndubuisi Ekekwe (@ndekekwe) February 23, 2024

Drawing Parallel with Saudi Arabia on economic diversification, as non-oil sector contributes 95.30% to Nigeria’s GDP

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