Economic Diversification in Nigeria : Lessons from Other Countries of Africa

The global fall in oil prices has caused significant external shocks to developing countries whose sole reliance on oil has seen a drastic fall in revenues that accrues from oil sales. To address this issue, there have been renewed calls for developing countries to diversify their economies so as to protect, mitigate and reduce the external shocks that results from depending on a single source of revenue. Nigeria has made several attempts to heed that call. Still, it has not been very successful in making that transition, although there are indications that it may be heading in that direction. This research set out to examine diversification in developing countries using a case study methodology. The intention is simply to draw lessons from countries who have failed to make the diversification and from those who have made the diversification. The findings of this research reveal that diversification is not only a Nigerian problem, several African countries have diversification issues. Secondly, it is a complex process, and economic diversification needs an enabling environment, the right institutional mix (financial, legal, regulatory and market institutions), the necessary infrastructure, human capital development, entrepreneurship combined with the right policy mix sustained over a considerable period of time. Finally, structural challenges continues to hinder any significant transition in terms of economic diversification in developing countries