A perfect illustration of what might happen if Nigeria ever managed to get its economic ducks in a row is currently unfolding in the United Arab Emirates (UAE). Like Nigeria, the middle eastern country is an oil producing country and a member of the 15-member Organization of Petroleum Exporting Countries (OPEC). At the same time, and again just like Nigeria, UAE is a largely monocultural economy, depending on revenue from oil exportation. But that is where the comparison stops, for starting in 2016, the country of slightly under 10 million people resolved to reduce its dependency on oil and focus on boosting its non-oil trade.
Judging by available data, this resolve is beginning to yield dividends as, for the first time, UAE’s non-oil trade broke the one trillion dirham (the country’s currency) mark over the first half of 2022. Within the same period, non-oil imports rose by 19 percent while, with re-exports increasing by 20 percent. How did the UAE manage to achieve this quick turnaround? In the first place, the country has been active in establishing trade agreements with a slew of trading partners, among them India, Indonesia, and Israel, leading to a growth in the volume of trade. At the same time, UAE has been pushing a strong reform agenda, the centerpiece of which is the opening up of the country to international talent and foreign investors. The significant rise in non-oil exports is proof that this strategy is working.
To be sure, UAE is not completely out of the woods. It remains, all said and done, a rentier state, and its relatively small population means that any kind of comparison with Nigeria (population circa 200 million) must be done with extreme caution. Still, the progress that the small middle eastern country has made in freeing itself from the clutches of hydrocarbons means that no country is fated to dependency. This is a crucial point that Nigerian leaders at state and federal levels of government must keep in mind.
For a while now, successive Nigerian administrations have vowed to wean the country’s economy off oil and expand its sources of foreign revenue. Yet, due to various factors, among them lack of political will and monumental corruption, Nigeria remains essentially a rentier state, supremely vulnerably to the gyrations of the global hydrocarbon economy. Every Nigerian leader knows that this is not the way to run a modern economy, that the country needs radical economic reorientation, yet nobody seems able to do anything about it. Instead, the Nigerian elite continue to live like there’s no tomorrow, borrowing money at will in an endless spree of fiscal recklessness. Just last week, Finance Minister Zainab Ahmed disclosed that the country is poised to borrow in excess of N11 trillion and sell off some national assets in order to fund next year’s budget.
The UAE’s modest success in economic diversification demonstrates just what can be achieved when the will is there.
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