The economy of a nation best describes the state of that particular nation in terms of the production and consumption of goods and services, the careful and articulate management of such resources and the supply of money. It deals with the system according to which the money, trade and industry of the country are best organized.
The business dictionary defines the economy as the entire network of producers, distributors and consumers of goods and services in a local, regional or national community.
Thus, the Nigerian economy focuses on the build of the country’s economy, the goods and services existent in the country and their systematic production, distribution and consumption among its inhabitants and other international bodies and agencies. Nigeria is a middle income, mixed economy and emerging market with expanding manufacturing, financial, service, communications, technology and entertainment sectors. Its economy is said to be mixed in the sense that it comprises a mixture of private and public enterprises. In recent times, there seems to be an increase in the private enterprises as compared to their public counterparts in Nigeria.
The Economic sectors of a country can be said to be a division of a country’s population based upon the economic areas in which the population is employed. Many economists recognize 5 sectors, the Primary, Secondary, Tertiary, Quaternary and Quinary sectors; while other economists recognize only 3 sectors: the Primary, Secondary and Tertiary sectors whereby the quaternary and quinary sectors are grouped under the tertiary sector.
The Primary Sector: This involves companies that participate in the extraction and harvesting of natural resources from the earth; such as agriculture, mining, forestry and other natural resources industries. In Nigeria, we have the oil industry, natural gas, and agriculture leading to the production and cultivation of crops like yam, rice, maize, sorghum, millet, cassava, tomatoes, beans, onions, coffee, tobacco, kolanut, cotton, palm oil, rubber, groundnut etc.
The Secondary sector: This consists of processing, manufacturing, engineering and construction companies.
The Tertiary Sector: this consists of the service industries, such as financial institutions, schools and restaurants. Transportation and distribution of products also fall under the tertiary sector.
The Quaternary Sector: This sector is usually referred to as the knowledge-based sector of the economy. It encompasses the intellectual services; research, knowledge, development and information. It is usually based on skill and knowledge.
The Quinary Sector: this is the top economic sector. It is a branch of a country’s economy where high level decisions are made by top level executives in the government, industry, business, education, media and non-profit organizations. The quinary sector can be referred to as the decision making sector of the economy.
In Nigeria, the economic sectors are generally grouped into 3; the Primary, Secondary and Tertiary sectors.
FACTORS AFFECTING THE NIGERIA’S ECONOMY
Inflation: Inflation is best described as the continuous increase in the prices of goods and services in the market. Here, people buy the same quantity of goods at higher prices. This affects the standard of living of the populace as it results to social problems such as armed robbery, prostitution, unemployment, etc.
High interest rates: An increase in interest rates prevents businesses/individuals from borrowing to finance the development of real estates, new businesses and furthermore, home improvements. Small and Medium Scale enterprises (SMEs) cannot get credit for expansion and loans are unavailable to new starters.
Value of the Naira/ Exchange Rates: The value of the naira to other currencies of the world greatly affects the economy of the nation. The exchange rate at every point in time affects the sales of goods both on domestic and international levels. An increase in the value of the naira against other currencies will enhance strong competition between the local and foreign producers. As it enables the local producers sell off their goods at lower or similar prices as the imported ones thereby boosting the economy. If the naira is weak, products that depend on inputs and raw materials from foreign countries will become expensive.
Inability to process raw materials to finished products: This greatly affects the economy of Nigeria as most of its high yielding raw materials are converted to finished products in foreign countries. We lack the basic skills and equipments required for such processing. The country expends more resources trying to process these goods externally and at the end still import the finished products. However, some of the products which are being processed in the country fall below the basic purity standards acceptable by foreigners and as such are sold way below their worth.
Government regulations: Government regulations are important as they keep the standard of products at levels that will promote safety of consumers, employees, natural resources and the environment. Excessive regulations though could harm SMEs and at times big companies thereby resulting to a slump in the economy.
Corruption: Corruption has seeped into the various segments of the country but most commonly among government officials who embezzle public funds to enrich themselves. Corruption affects the economy daily: making government projects costlier; contractors do poor jobs; low quality of education as educational facilities are not made available to schools and also unqualified students gain admission into the university.
Terrorism/Insecurity: Nigeria is now known to be home to the 2nd most deadly terrorist group in the world (Boko Haram). This state of insecurity scares foreign investors away from the country as they prefer taking their investments to safe havens. Even the local investors are in fear of their lives as cases of kidnapping and assassination are the talk of the town. To stop capital flight, the government must dismantle Boko Haram so that the economy can go back to normal.
Over Dependence on Import: Imported goods are sold at costlier prices within the country. The dependence on imported goods is high in Nigeria as the country imports such goods as toothpicks, matches and apples. The dependence on such goods kills patronage to the local producers and puts pressure on the available foreign exchange meant for importation of essential raw materials. To boost the economy, Nigeria has to learn to produce all that it consumes.
Poor Infrastructure: Inadequacy in the basic infrastructures of the country such as power supply and transportation system hinders businesses in the country from doing so well. The businesses tend to provide the means of producing and distributing their products and as such subsequently increase the cost of such products.
Poor leadership/ god fatherism: This has become the trend in top leadership positions in the country. An existing leader will always want his/her candidate to take over after him not minding the candidate’s ability to function adequately in said positions. This has thus led to cases of “no-change” in power as leadership revolves around similar individuals with similar lines of thoughts. Those with ideas that will better the country’s economy are not given the opportunity to rule and the country thus sinks deep into worse economic turmoil.
References are available on request
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