The political economy of economic diversification in Nigeria

As Africa’s largest economy and its most populous country, over a decade of rapid economic growth in Nigeria contributed to the 'Africa Rising' narrative. However, like many African commodity exporters, this economic growth, billions of dollars in oil earnings and electoral democracy have not translated into a diversified and industrial economy. This study examines why the Nigerian economy remains so dependent on oil and is non-industrial, which I argue are economic and development outcomes of specific policy choices constrained by Nigeria’s institutional configuration or the political settlement. In this endeavour, my central preoccupation is with the political processes of decision making which at any point in time favour one policy choice over the other in resource-rich and plural societies such as Nigeria, and the economic and development outcomes of these policy choices. I employ the political settlements analytical framework to unveil these political processes and the conditions they create in which certain policies are preferred over others. This entails an examination of the causal relationship within the three variables of 'constraints', 'policies' and 'economic and development outcomes'. I argue that understanding Nigeria's challenges of economic diversification requires an examination of its political settlement to identify horizontal (elite competition), vertical (societal agitations for resource redistribution) and external (oil shocks) constraints on a ruling coalition, and the specific economic policy responses each constraint generates. Essentially, my research explains how policy makers are constrained to pursue certain courses of action over others, and the outcomes of these policies on economic growth and the structural transformation of production, exports and government revenue. In the Nigerian context, the study also examines how sub-national and regional differentiation in the distribution of growth in states like Lagos and Kano affect future political processes and their policy outcomes. The thesis draws from multiple data sources, including economic data, semi-structured interviews with various stakeholders, documentary sources, and participant and non-participant observation.