Fiscal Crisis and the Politics of Non-Oil Revenue Drive in Nigeria

Abstract

Over the years, Nigeria’s heavy dependence on the crude oil as the main source of export earnings has made it vulnerable to market vagaries and other conditions associated with international oil politics. The current oil slump being experienced may have started taking its toll on Nigeria as the Federal Government has announced some austerity measures aimed at cushioning its impact on the economy. Some of the measures announced by the Minister of Finance/Coordinating Minister for the economy are payment of tax on luxury goods by Nigerians, and reduction in public expenditures and international travels by public servants. Given that price volatility, arising mainly from decline in crude oil prices (and production), exacts heavy costs in terms of incomes, indebtedness, poverty and development on the country, there is the need to focus on other  revenue sources. Using mainly secondary data, this paper examines the prospects of non-oil revenue drive in Nigeria. The paper evaluates not just the extent of contemporary fiscal crisis and its effects on socio-economic development in Nigeria; it also reviews government policy responses to the crisis; as well as suggesting policy options for overcoming the fiscal crisis in Nigeria. The paper concludes that although the contributions of the non-oil sector, particularly telecommunications, construction, wholesale and retail trade, hotel and restaurant services, manufacturing and agriculture, to Nigeria’s economic growth has been tremendous over the past decade, yet the economic growth has not reduced poverty nor created jobs as about two thirds of the population lives on less than 1 US dollar (USD) per day and the unemployment rate in 2013 was 27.3%. As a major challenge for the economy is the dilapidated state of infrastructure and the over-dependence on the oil and gas industry, the paper recommends that private sector involvement in infrastructure development and in the development of the non-oil sector holds more promise for Nigeria’s economic rejuvenation.