IS THIS NIGERIA’S STRUCTURAL TRANSFORMATION?

Nigeria may be undergoing structural transformation, according to Joshua J. Omojuwa, a structural transformation expert. Structural transformation is the process of an economy moving from one that produces mainly commodities to one that produces a wider range of goods and services. While growth is measured by an increase in production of existing goods, transformation is about expanding the range of goods produced.

In recent years, Nigeria's economy has grown rapidly, with a 4.43% expansion in the second quarter of 2025, the strongest quarterly print in five years. Non-oil growth also increased to 4.31%, accounting for roughly 96% of the country's output. This growth is particularly interesting as it comes from a non-oil sector, indicating a shift towards producing more diverse goods and services.

One of the notable changes is the closure of a currency arbitrage premium that previously rewarded proximity to allocation of resources over actual production. This has led to a significant decrease in petroleum imports and an increase in refined petroleum exports, indicating a shift from an oil-dependent economy to one with a more diversified production base.

However, while these developments suggest progress towards structural transformation, Nigeria is still far from achieving it. The country currently relies heavily on oil exports, which account for about 88% of its total exports. The services sector, which should be a key driver of transformation, has not shown significant progress. Additionally, the country's foreign exchange reserves are heavily tied up in debt servicing, limiting its ability to invest in productive capacities.

Therefore, while Nigeria is moving in the right direction towards structural transformation, it is not yet there. The next phase will depend on the growth of non-oil exports, which have the potential to drive the economy towards a more diversified and economically resilient future.