Nature of Nigeria Economy

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In today’s class, we will be talking about the nature of the Nigeria Economy. Enjoy the class!

Nature of Nigeria Economy

The study of the structure of an economy is, in essence, the study of the ‘Anatomy’ of that economy. The structure of the Nigerian economy is a system whereby the organizational framework of the economy is inter-related, logically connected through which the activities of the economy are coordinated or aligned.

The structure of the Nigerian economy viewed from three major sectors of primary, secondary and tertiary include the structure of production, financial system, the factorial composition of value-added, the composition of resources and uses of resources, demographic variable in forms of the population and the degree of urbanization.

The outline of the structure of the Nigerian economy can be broadly classified into:

Production:

Which is made up of:

(a) Agriculture (cropping, livestock, forestry and fishery)

(b) Manufacturing

(d) Real estate and construction

General commerce:

Which is composed of:

(a) Bill discounted

(b) Domestic trade

Services:

Which include:

(a) Public utilities

(b) Transport

Others are:

(a) Credit and financial institutions

(b) Government

Miscellaneous:

Which are:

(a) Personal and professional

(b) Private sectors.

Evaluation

Explain the structure of the Nigerian economy
Outline the classifications of the structure of the Nigerian economy

A general overview of the Nigerian economy

Nigeria is a structurally imbalanced economy that completely depends on agriculture before the discovery of the oil boom.

Lack of diversification made the Nigerian economy to have the shape of a crooked glass, broad at the bottom, thin at the middle, and broad again at the top. At the bottom is the primary sector made up mainly of the agricultural sector. Thin in the middle is the industrial sector largely under-developed, and broad again at the top is the service sector consisting mainly of relatively under-trained self-employed artisans, some professionals and civil servants.

In 1970, the emergence of oil distorted the attention paid to other sectors of the economy which brought an era of economic downturn and massive importation. In 1981, oil prices fell drastically and Nigerian external debt grew high.

Again, in 1986, the world oil market witnessed further fall in prices which made the economy to prone to external disequilibrium with all sectors of the economy seriously affected.

Industrial capacity utilization fell, shortage of essential commodities arose, nation’s foreign reserves depleted, external and domestic debts setting in, balance of payment problem became chronic, unemployment, inflation and other socio-economic problems triggered off, as overseas banks stopped confirming letters of credits for Nigerian banks.

The burden of economic management became a serious problem, and alternative approaches were introduced to tackle the problem through the adoption of the, ‘Structural Adjustment Programme (SAP)’, in 1986. The primary aim of the programme is to effectively alter and restructure the production and consumption pattern of the economy, eliminate price distortions and reduce the heavy dependence on the export of crude oil and import of consumer and producer goods.

Evaluation

Explain how Nigeria came up with economic downturn in 1981
Highlight the primary aims of SAP

Nature and structure of industries in Nigeria

An Industry– refers to a number of firms producing similar commodities. Thus, Industrialization is the process of building up a nation’s capacity to convert raw materials and other inputs to finished goods, and to manufacture goods for other products or for final consumption. There are five main types of industry that dominate the Nigerian economy, which are:

Processing Industry– is an industry which involves in beverages and semi-finished goods
Manufacturing Industry– is an industry which involves transforming raw materials into finished goods.
Craft Industry– (i.e. Cottage industries) is an industry which involves in the metal and wood carving work and constructive activities where the needed materials are sourced locally and the use of simple tools
Mining Industry– is an industry which involves the extraction of raw-materials from the earth crust.
Service Industry– is an industry which involves in retail, transport, distribution, food service, as well as other services-dominated business.

Evaluation

Differentiate between industry and industrialization
List at least four main types of industry in Nigeria

Contributions of primary, secondary and tertiary sectors

Primary Sector– is a sector that involves the extraction of raw – materials. This sector helps to provide employment to Nigerian people and make raw – materials available to feed the nation’s industries. The sector also provides food for the teeming population of Nigerian people, and income for the government.
Secondary Sector– is a sector that is involved in the conversion of raw-materials into finished goods. This sector helps to provide employment to people, add value to materials, generate income for the government, enhance economic development, improve the standard of living of the people, etc.
Tertiary Sector– is a sector that is involved in commercial activities and the rendering of direct and indirect services. This sector helps to distribute goods to consumers. It employs people, and render essential services to the people as well.

Evaluation

Briefly discuss the three economic sectors in Nigeria
State three economic contributions of each sector.

Economic activities of the six geo-political zones in Nigeria

The idea of six geo-political zones in Nigeria emanated and crept into the dictionary of the country from the late General Sanni Abacha, the former Military Head of State (1993-1998). Although, the categorization of the entire notion into geopolitical zones did not come as an official pronouncement, by 1997 this classification had gained prevalence in the political language of the notion. The six major zones into which Nigeria as a country is divided are:

North-West Zone:

The states found in this zone include Sokoto, Zamfara, Kebbi, Katsina, Jigawa, Kano and Kaduna States. The economic activities of this zone is majorly agriculture in terms of farming and rearing of animals. They plant crops like cereals – maize, millet, sorghum, corns, etc, both for local consumption and exportation. Also, they are involved industrial activities like mining of mineral resources like lime-stone for the production of cement in Sokoto.

North-Central Zone:

The zone represents the middle belt of Nigeria comprising of Benue, Kogi, Nasarawa, Niger and Plateau States. The Federal Capital Territory (FCT) Abuja is also located in this zone. The main activities in this zone are farming, weaving, blacksmithing, tying and dying, and mat making. The main economic activities of this zone are farming and fishing as a result of their fertile nature of the soil and the presence of River Niger and Benue. They are equally involved in mining activities in Jos (tin and columbite), gold and Iron- Ore in Kogi and limestone in Benue State. Hydro-electric power is also found in this region, eg Kainji Dam.

North-East Zone:

The states in this zone include Yobe, Borno, Bauchi, Gombe, Adamawa and Taraba States. The major economic activities of this zone involve agriculture and livestock production, especially in cattle, sheep and goat. They are equally involved in minor mining activities. The zone is the least endowed with mineral resources.

South-West Zone:

The zone is made up of the six Yoruba speaking states of the country. The states are Lagos, Ogun, Oyo, Ondo, Ekiti, and the Osun States. The zone is endowed with both agricultural and commercial activities. The region engaged in farming especially cash crops like cocoa, kola nut, coffee, coconut, livestock activities like poultry and piggery, etc. Minerals like limestone at Ewekoro and Sagamu in Ogun State, bitumen in Ondo State are mined with other commercial activities

South-East Zone:

The zone is made up of the five Igbo Speaking states which are Anambra, Imo, Enugu, Abia and Ebonyi States. The main economic activities of this zone are the agriculture of cash crops like palm products, rubbers, food crops, etc. Minerals like lime-stone in Nkalagun in Anambra State, lead and zinc mineral in Abakaliki in Ebonyi State and coal mining in Enugu. The zone is also noted for heavy trading and local manufacturing in Abia and Anambra.

South-South Zone:

The zone comprises of the six oil-producing states of the Niger delta which are Edo, Delta, Rivers, Bayelsa, Cross River and Akwa-Ibom States. The major economic activities of this zone include the production of crude-oil (Petroleum), limestone in Edo and Iron-Ore in Delta. They are equally involved in crop farming like cocoa, oil palm, kola, rubber, etc, fishing due to their location in Niger Delta. Other economic activities are in trading and seaport activities.

Evaluation

List the six geo-political zones in Nigeria
Briefly explain the economic activities of each zone

Reading assignment

An Authority in Economics for Senior Secondary School by Comrade Okoro Francis O Pages 372-380

General revision

Distinguish between money cost and opportunity cost.
What form of business enterprises would you recommend for a tailor?
What factors limit indigenous firms in West Africa?
Why do Government conduct population census?
Describe four merits of a public corporation.

Weekend assessment

Briefly explain the general overview of the Nigerian economy
Discuss the main economic activities of four geographical zones of the country.

In our next class, we will be talking about Agriculture. We hope you enjoyed the class.

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Nature of Nigeria Economy