The Impact of Oil and Non-Oil Revenue on the Economy of Nigeria
Chapter One
OBJECTIVES OF THE STUDY
- To examine the impact of oil and non-oil revenue on economic growth of Nigeria.
- To determine whether non-oil exports contribute to Nigeria’s Gross Domestic Product.
- To find out whether oil export generate revenue in Nigerian economy.
CHAPTER TWO
REVIEW OF RELATED AND RELEVANT LITERATURES
Conceptual Framework
Crude Oil is one of the mineral resources being produced in commercial quantity in Nigeria. The petroleum sector serves as the main supply of energy in the country. The Petroleum and Natural Gas reserves are usually found where there are Crude Oil reserves (Onigbinde, 2014). Therefore, there are Petroleum and Natural Gas reserves association with Crude Oil and Non-Associated reserves in the country. Petroleum production in commercial quantity in Nigeria has led to rapid increases in oil revenue, GDP and Foreign Exchange earnings. Since Petroleum and Natural Gas are the major suppliers of commercial energy in the most 5 populous African country. The term Multinational Corporation (MNC) can be defined and described from differing perspectives and on a number of various levels, including law, sociology, history, and strategy as well as from the perspectives of business ethics and society. Hill (2005) defines Multinational Enterprise as any business that has productive activities in two or more countries. Certain characteristics of Multinational Corporations should be identified at the start since they serve, in part, as their defining features. Often referred to as “Multinational Enterprises,” and in some early documents of the United Nations they are called “transnational organizations,” Multinational Corporations are usually very large corporate entities that while having their base of operations in one nation – the “home nation” carry out and conduct business in at least one other, but usually many nations, in what are called the “host nations.” Multinational Corporations are usually very large entities having a global presence and reach (Hashimu and Ango, 2012).
Concept of Non-Oil Revenue and Economic Growth
Non-oil revenue is the income or proceeds generated from the commodities that are sold in the international market excluding crude oil (petroleum product). Non-oil exports on the other hand are those commodities (excluding crude oil) that are sold abroad in order to generate revenue. These non-oil exports include agricultural products or crops, manufactured goods, tourist services/receipts, solid minerals, telecommunication services and other exports. Non-oil export can also be seen as a sector. Kromtit and Gukat (2016:133) stated that:
The non-oil sector comprises of those groups of activities which are outside the petroleum and gas industry or those not directly linked to them.
It c o n s i s t s o f s e c t o r s s u c h a s m a n u f a c t u r i n g, a g r i c u l t u r e , telecommunication service, finance, tourism, real estate, construction and health sectors.
Also, Elechi, Kasie and Chijindu (2016:4) were of the opinion that:
Non-oil exports are products which are produced within the country in the agricultural, mining, quarrying and industrial sector that are sent outside the country to generate revenue for the growth of the economy, excluding oil products like coal, cotton, timber, groundnut, cocoa, beans, palm kernel, palm oil, hides, skin, cattle, etc.
Therefore, non-oil sector comprises of all sectors of the Nigerian economy with the exemption of oil and gas sub-sector. All the proceeds generated from these non-oil sectors constitute the non-oil revenue. The definition of non-oil revenue by Kromtit and Gukat (2016) is applicable to this study.
Concept of Economic Growth
The concept of economic growth has to do with the increase in the output level of an economy which can also mean an increase in income level. Economic growth of a country can be determined in the productivity level, volume of trade, investment in both human and physical capital. Ochejele, (2007) defines economic growth as “the quantitative and sustained increase in the country’s per capita output or income accompanied by expansion in labour force, consumption, capital and volume of trade”. Accordingly, Anyanwu and Oaikhenan (1995) simply defined economic growth as the increase overtime of a country’s or an economic capacity to produce those goods and services needed to improve the well-being of the citizens in increasing numbers and diversity. It is conventionally measured as the percentage rate of increase on Real Gross Domestic Product (RGDP). Growth is usually calculated in real terms, that is, inflation- adjusted terms, in order to net out the effect of inflation on the price of goods and services produced. The growth of Real Gross Domestic Product (RGDP) between 2004 and 2008 was driven mainly by the non-oil sectors as reflected in the non-oil GDP and that the industrial output however fell by 2.2 percent due to poor performance of the oil sector CBN (2008).
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used the exploratory research design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying some previously authentic works carried out by various authorities recognized globally in this field of study. The design was suitable for the study as the study sought to examine the impact of oil and non-oil revenue on the economy of Nigeria.
The advantages of exploratory research design includes:
- Flexibility and adaptability to change,
- Exploratory research is effective in laying the groundwork that will lead to future studies.
- Exploratory studies can potentially save time and other resources by determining at the earlier stages the types of research that are worth pursuing
Sources of data collection
Data were collected from Secondary source. The secondary source includes mediums like the library, online forums, the internet, textbooks, journals, unpublished works and other relevant articles.
Population of the study
Population of a study is a group of persons or aggregate items or things. However, the researcher is interested in getting information which will aid to examine the impact of oil and non-oil revenue on the economy of Nigeria. All relevant and related works carried out in line with examining the impact of oil and non-oil revenue on the economy of Nigeria formed the population of the study.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
Introduction
This chapter presents, analyzes and interpret the data collected through various secondary sources. In order to provide verifiable and credible answers to the research questions, the researcher adopted the exploratory research design and made use of purely secondary data. The secondary data so collected were proven empirical works of notable researchers in this field who conducted similar research using a bigger and better population and the most appropriate statistical tool. It is believed that their findings will us draw a statistically correct conclusions on this study.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to reiterate that the objective of this study was to examine the impact of oil and non-oil revenue on the economy of Nigeria.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in examining the impact of oil and non-oil revenue on the economy of Nigeria.
Summary
This study was undertaken to examine the impact of oil and non-oil revenue on the economy of Nigeria. The study opened with chapter one where the statement of the problem was clearly defined. The study purpose and research hypotheses were defined and formulated respectively. The study reviewed related and relevant literatures. The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed here is the descriptive survey method. The study analyzed and presented the data collected in tables and tested the hypotheses using the chi-square statistical tool. While the fifth chapter gives the study summary and conclusion.
CONCLUSIONS AND RECOMMENDATIONS
The results and findings of this study indicate that there is positive and significant relationship between non-oil export, oil export and GDP. In the last few years, the impact of non-oil export has been significant and has the potential to make a greater impact on Nigeria’s non-oil export sector in the long-run. This in turn will translate to higher foreign earnings as well as gross domestic product and consequently a higher level economic growth. This will also be the driving force in ensuring Nigeria adequately supports the non-oil export sector and diversifies the productive base of the economy so as to reduce dependency on the oil sector and imports.
Based on the findings of this study and the conclusion, the following policy recommendations are suggested:
- The government should put more resources into enhancing and promoting non-oil exports by supporting the NEPC to improve on the effectiveness of administration incentives to non-oil exports.
- Emphasis should be on agricultural exports by creating incentives for the poor farmers to start producing for export in an environment where it is assured that not only will their products reach foreign markets in time, but do so, may go a long way in alleviating poverty.
- Infrastructure amenities like road, railways, telecommunication, and electricity among others which are bottleneck for farmers and manufacturers should be improved.
- Ensure workable agricultural policies that help operators of non-oil sectors have access to cheap capital which will enable them produced higher output.
Nigeria’s dependency on oil exports has made it vulnerable to continuous fluctuations in world oil prices have it has no control over. Therefore in collaboration with the NEPC and other relevant government agencies, the government has to encourage non-oil exports by investing adequately through incentives and strike a balance between the oil and non-oil sectors of the economy. This will make Nigerian economy flourish and have alternative source of foreign exchange earnings as a result of the diversification of the economy.
REFERENCES
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- Ajakaiye, D.O. (1997). An overview of the non-oil sector of the Nigerian Economy. Central Bank of Nigeria Economic and Financial Review 35 (4), 14-28.
- Anyanwu, J. C., Oyefusi, A., Oaikhenan H., & Dimowo, F. A. (1997).The structure of the Nigeria economy. Anambra: Joanee Educational Publisher Ltd.
- Akwe, J. A. (2014) Impact of non-oil tax revenue on economic growth: The Nigerian perspective. International Journal of Finance and Accounting 3 (5), 303-309
- Awe, A. A., & Ajayi, S. O. (2009), Diversification of Nigerian revenue base for economic development: The contribution of the non-oil sector, Pakistan Journal of Social Science 6(3), 138-143
- Bature, N.B. (2012). The birth of dutch disease theory in economics. Lagos: Data Quest Publishers.
- Central Bank of Nigeria (2008). Central bank of Nigeria annual report. Abuja, Nigeria: Central Bank of Nigeria.
- Elechi, J. S., Kasie, E. G. & Chinjindu, A. A. (2016). The contribution of the Nigerian banks to the promotion of non-oil exports (1990-2013). Asian Journal of Economics Business and Accounting 1 (1) PP 1-13, www.sciencedomain.org
