Rent-seeking economy rigged against most Nigerians— Dele

Nigeria's economic structure increasingly favors rent-seekers over value creators—a structural distortion that constrains growth and investor returns across sectors. According to Dele Kelvin Oye, former National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and ex-Chairman of the Organised Private Sector (OPS), the nation's reliance on unproductive wealth extraction rather than genuine innovation is rigging economic opportunity against the majority of Nigerians.

The rent-seeking economy describes a system where participants extract value without creating it—typically through monopolies, regulatory capture, political connections, and artificial scarcity. In Nigeria's context, this manifests across import quotas, licensing bottlenecks, government contracts awarded via patronage rather than merit, and currency management that benefits forex hoarders over manufacturers. The result: capital flows to insiders, while productive entrepreneurs and small businesses struggle for access to credit, foreign exchange, and level playing fields.

## What exactly drives Nigeria's rent-seeking problem?

Three primary mechanisms sustain this distortion. First, regulatory barriers create artificial gatekeeping—obtaining licenses, permits, and import approvals often requires political access rather than operational competence. Second, fiscal policy inadvertently incentivizes non-productive assets; energy spent lobbying for contracts or import allocations yields higher returns than investing in factories or R&D. Third, foreign exchange scarcity—exacerbated by oil dependence and capital flight—concentrates dollars among those with political favor, pricing out legitimate manufacturers competing for inputs.

## How does this constrain GDP and investor confidence?

When rent-seeking dominates, human capital migrates toward extractive roles (politics, bureaucracy, trading) rather than productive ones (engineering, manufacturing, tech). This hollows out the real economy. Manufacturing as a share of Nigerian GDP has declined from ~15% (2000s) to ~9% (2023), while services—often rent-dependent—expanded. For foreign investors, this creates structural risk: highly volatile policy reversals, sudden forex restrictions, and sudden rule changes by those who benefit from the status quo.

## Why structural reform is the investor's imperative

Oye's advocacy for systemic change reflects a growing consensus among Nigeria's private sector leadership: cosmetic interventions—tax holidays, special economic zones—fail without addressing the root causes of rent-seeking. Real reform requires depoliticizing the CBN's forex allocation, simplifying regulatory approval timelines, and enforcing merit-based procurement in government contracts. Such moves would redirect capital toward productive sectors (agriculture tech, manufacturing, energy transition) where Nigeria has genuine comparative advantage.

The CBN's recent moves toward exchange rate liberalization and the removal of some fuel subsidies are steps in the right direction, but incomplete. Investor confidence hinges on whether the government can sustain pressure on rent-seeking elites—a politically difficult task. Countries that succeeded (Vietnam, South Korea) required decades of institutional discipline and leadership commitment.

For international and diaspora investors, the message is clear: Nigeria's medium-term return profile depends less on oil prices or naira volatility than on whether elites choose to build rather than extract. Current signals remain mixed.

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