SERVICE TRADE AND NON-OIL EXPORT IN NIGERIA

ABSTRACT

The paper was set to examine the relationship between different aspects of service trade and non oil export in Nigeria as well as assess the impact of capacity development on value of service trade and the implications for improving value of non oil export in Nigeria. Secondary data 1980 to 2010 were used. Data were analysed using descriptive statistics, correlation analysis and regression analysis. Results show that total service trade value in Nigeria has increased from $1126.59 million in 1980 to $3076.19 million in 2010. Significant correlations existed between the total value of service trade and all the types of service trade except with other service trade value. Road network, government (domestic) capital expenditure on services, agricultural credit and domestic service GDP positively determine exportable services. Recommendations include improvement of service GDP and agricultural credit/loan facilities.

KEYWORDS: Exportable services; Road network; Government expenditure; Agricultural credit.

INTRODUCTION

Services constitute one of the key sectors providing significant contribution to economic growth and a country’s competitiveness including Nigeria and African as a whole (Table 1). Banking, insurance and finance, tourism, retail and food and beverages, media and entertainment, education and health, and airline industry are some of the sub-sectors in the services sector. The list also includes electricity and water supply as well as good road networks. A country’s domestic capacity to provide these services will not only improve welfare of her citizens but also in the long run became a set of assets for attraction of foreign exchange. Table 1 is a breakdown of subsectors contribution to Nigerian Gross Domestic Product (GDP) in 2010. It showed that the service sector is the second largest contributor to the country’s GDP. Nigeria Government established the Federal Service Commission (SERVICOM) in 2005 to promote service in the country. Thus, the Government knew the potentials of using the services sub sector to create wealth and alleviate poverty.

Today, tourism is a fast growing foreign exchange earner for countries that have developed or developing the sub sector and its associated services. Kaur (2011) aptly noted that due to technological progress, since 1980s, international trade in services has been increasing rapidly. It has now accounted for twenty per cent of globe trade. Globally, the share of primary sector and secondary sector has been declining while the share of service sector is growing rapidly. Through the internet and ecommerce, many communications and information processing activities have opened new opportunities for cross border service trade, which has strengthened the importance of international service trade.