Nigeria’s Q1 2025 GDP figures reveal a profound economic truth obscured by aggregate statistics: the country operates not as a unified economic entity but as a constellation of distinct regional economies, each exhibiting unique patterns of comparative advantage that mirror the theoretical frameworks of development economics. This spatial heterogeneity represents both Nigeria’s greatest structural challenge and its most compelling opportunity for sustained growth acceleration. The economic geography literature suggests that successful development requires recognition of what economists term “agglomeration economies” and “locational fundamentals” rather than pursuing uniform development strategies. Nigeria’s regional economic landscape demonstrates this principle with remarkable clarity, where geographic endowments, historical trade patterns, and infrastructure development have created distinct economic clusters that demand differentiated policy approaches.
“The pathway to agricultural transformation requires recognising that comparative advantage in these regions lies not merely in production but in developing what economists call “agricultural innovation systems”.”
The Northern Agricultural Complex
The Northwest and Northeast regions exemplify what development economists call “agricultural transformation zones”, where traditional farming systems encounter modern market pressures. These regions contribute disproportionately to Nigeria’s food security but exhibit growth rates barely exceeding 1%, reflecting the classical challenge of agricultural productivity stagnation that constrains developing economies. The fundamental constraint lies not in land availability or climatic conditions, but in what economists term the “structural transformation deficit”. Raw agricultural output generates minimal value addition, creating what development theorists recognise as the “commodity trap”, where regions remain perpetually dependent on low-value primary products. Climate volatility compounds this challenge, introducing yield uncertainty that discourages both private investment and technological adoption.
The pathway to agricultural transformation requires recognising that comparative advantage in these regions lies not merely in production but in developing what economists call “agricultural innovation systems”. This involves creating backward and forward linkages that transform raw agricultural output into higher-value processed goods, thereby capturing more value within regional economies. Successful agricultural transformation typically requires coordinated investments in irrigation infrastructure, mechanisation, and agro-processing facilities that create employment opportunities beyond traditional farming.
The Federal Capital Territory Innovation Corridor
The North Central zone presents Nigeria’s most intriguing example of what urban economists term “mixed-economy clustering”. Abuja’s emergence as a services hub demonstrates how administrative functions can catalyse broader economic development, while the region’s mineral resources represent untapped potential for industrial diversification.
The challenge lies in overcoming what economists call the “enclave development problem”, where dynamic urban centres fail to generate spillover effects for surrounding rural areas. Abuja’s prosperity remains largely disconnected from the broader regional economy, creating dualistic development patterns that limit overall growth potential. Strategic development requires fostering what economic geographers term “innovation spillovers” through improved transport connectivity and ICT infrastructure that enables knowledge transfer between Abuja’s dynamic service sector and the region’s industrial potential. The presence of solid minerals creates opportunities for developing what economists call “resource-based industrialisation”, where local mineral processing creates manufacturing clusters that can serve broader national and regional markets.
The Lagos Megalopolis Effect
The South West’s economic dominance reflects what urban economists term “metropolitan primacy”, where a single urban agglomeration becomes the overwhelming centre of national economic activity. Lagos State alone contributes approximately 30% of Nigeria’s GDP, demonstrating both the power and the peril of excessive economic concentration. This concentration creates what economists call “urbanisation economies”, where firms benefit from proximity to suppliers, customers, and specialised services. However, it also generates what urban planners recognise as “congestion diseconomies”, where infrastructure constraints limit further growth potential. The challenge involves managing what economists term the “metropolitan growth paradox”, where success breeds congestion that ultimately constrains expansion. The region’s manufacturing sector exhibits characteristics of what economists call “industrial clustering”, where related industries locate near each other to capture knowledge spillovers and reduce transaction costs. However, inadequate port infrastructure and transport networks create what supply chain economists term “logistical bottlenecks” that increase costs and reduce competitiveness.
The commercial diaspora networks
The Southeast demonstrates how what economists call “diaspora capital” can drive regional economic development through remittance flows and entrepreneurial networks. The region’s commercial dynamism reflects what economic anthropologists term “trading diaspora effects”, where historical migration patterns create business networks that facilitate commerce and investment. This region exemplifies what development economists call “trade-led growth”, where commercial activities become the primary driver of economic expansion. However, the economy remains constrained by what economists term “infrastructure deficits” and “energy poverty” that limit industrial development and productivity growth. The key to unlocking the region’s potential lies in what economists call “diaspora finance mobilisation”, where remittance flows are channelled into productive investments rather than consumption. This requires developing financial institutions and investment vehicles specifically designed to capture and deploy diaspora capital for economic development.
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The resource curse contradiction
The South-South presents a classic case of what economists term the “resource curse paradox”, where abundant natural resources fail to generate sustained prosperity. Despite controlling Nigeria’s oil wealth, the region exhibits the symptoms of what economists call “Dutch disease”, where resource extraction crowds out other economic activities and creates unhealthy dependence on commodity exports. The challenge involves what economists term “economic diversification” while leveraging existing comparative advantages in energy production. This requires developing what economists call “resource-linked industrialisation”, where oil and gas resources become inputs for petrochemical industries and other downstream manufacturing activities.
Strategic Implications for National Development
This regional analysis suggests that Nigeria’s development strategy should embrace what economists call “spatially differentiated development” rather than pursuing uniform national policies. Each region’s economic structure requires tailored approaches that leverage existing comparative advantages while addressing specific constraints. The northern regions require agricultural modernisation strategies that focus on value addition and climate resilience. The middle belt needs policies that foster mining-manufacturing linkages and service sector spillovers. The southwest needs urban management strategies that address congestion while maintaining agglomeration benefits. The southeast requires diaspora capital mobilisation and industrial development initiatives. The South-South needs economic diversification strategies that build on energy sector foundations.
This approach aligns with what economists call “new economic geography” theories that emphasise the importance of spatial factors in economic development. Rather than viewing regional specialisation as problematic, policy should encourage it while ensuring adequate inter-regional linkages that create national economic coherence. Success requires recognising that Nigeria’s regional diversity represents a strategic asset rather than a development challenge. Countries that successfully harness regional comparative advantages typically achieve both faster growth and more inclusive development outcomes. Nigeria’s path to sustained prosperity lies in embracing this geographic complexity rather than attempting to homogenise it through uniform policies that ignore spatial realities.
Dr. Oluyemi Adeosun, Chief Economist, BusinessDay Media
