President Muhammadu Buhari, at the presidential retreat organised for ministers-designate at the onset of his administration, said that the diversification of the nation’s economy would be the thrust of his economic policy.
“We will intervene in mining and agriculture, and we will upgrade the country’s physical and social infrastructure, which will broaden our revenue base and significantly improve the level of employment, especially among the youth,’’ he said.
While working on the 2016 budget, Buhari pledged that the budget would include fresh policies and measures that would stimulate the rapid diversification of the Nigerian economy.
Also at a meeting with a delegation of French investors in Abuja, the president assured that priority would be given to policies that would boost domestic manufacturing, while attracting greater investments in the agricultural and mining sectors.
Still laying the ground foundation to convince stakeholders and foreign investors that the change is visible and doable, Buhari made a case for the apparent slow pace of his administration:
“Our government came into office at a time when many people have abandoned the country’s manufacturing, agricultural and mining sectors.
“We are doing our utmost best to encourage diversification into these sectors.
“Ultimately, reducing unemployment will also help to improve security because unemployment and insecurity are inseparable,” he said.
Also, Buhari said, at the 55th Annual General Meeting of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), that agriculture would no longer be treated as a development programme but as business.
“The Federal Government is focusing on the development of agricultural value chain. Agricultural value chain allows the intervention of segments of the value chain such as production, processing, storage and marketing.
“Our goal will be to pursue government-supported, private sector agriculture value chain to make agriculture more productive, efficient and competitive.
“This is to provide enough food for domestic supply and create jobs through agriculture value chain,” he said.
Buhari, who noted that Nigeria had the richest agricultural resources in Africa, said that the country had no justification whatsoever to continue to import food.
Enough is enough
The buildup to economic diversification since the new administration of change has reached its peak and Nigerians, especially the massive army of unemployed, mostly unemployable youths and men, the hapless housewives who have been spending a lot more to buy much less commodities and the electorate stunned by every day revelations of stupendous corruption in the highest places in government of past administrations are tired, they have had it.
The drum of Change since the coming of the new administration is becoming less realistic with every economic hardship thrown at the people.
Stakeholders are uptight waiting for Mr. President to stop saying it and just start doing it.
The Institute of Investment Professionals recently emphasised that the system of mono-product economy needs to give way to the productive development of various sectors of the economy to engender meaningful economic growth.
In retrospect, the institute noted that the price of crude oil in the international market has plummeted by over 40 per cent since June 2014 when it was sold for 115 dollars per barrel.
“By this fall in the price of oil, it is a well-known fact that Nigeria’s large earnings or revenues from the oil sector have been truncated,’’ it says.
However, this is not to suggest that the Federal Government is unaware of the repercussions of the abysmal fall in crude oil prices, as it is renewing efforts to diversify the economy and place less emphasis on crude oil revenues.
As part of designed efforts to diversify the national economy, the Federal Ministry of Information and Culture intends to hold a National Summit on Culture and Tourism in April.
Information and Culture Minister Lai Mohammed said thatthe summit would “signpost our determination to put culture and tourism at the very centre of the Federal Government’s on-going efforts to diversify the economy away from oil.
“With the drastic fall in the price of crude oil, the Federal Government is currently in the process of diversifying the country’s economy to shift emphasis to other key sectors like tourism, agriculture and solid minerals.’’
Sharing similar sentiments, Mr Opeyemi Agbaje, a financial expert, advised the Federal Government to initiate realistic incentives and policies to boost Nigeria’s non-oil exports.
He, nonetheless, said that Nigeria was currently not in a good position to compete favourably in non-oil exports.
He conceded that the country had achieved significant diversification in terms of local production and consumption of goods, adding, however, that it had not attained enough competitiveness with regard to exports of made-in-Nigeria goods and services.
Agbaje said that South Africa’s exports revenue was not only driven by commodity sales but also by services of companies such as MTN, DStv and South African Breweries, among others.
“So, the challenge for the Nigerian economy is for the government to create policies and incentives that will allow our private sector to become exporters of goods and services.
“If our export revenues were earned by thousands of Nigerian companies exporting their services, we would not collapse anytime the price of oil falls.
“We also need to start refining our crude oil domestically and exporting refined products. By now, we ought to have been one of the biggest exporters of refined petroleum products in the world,’’ he said.
Agbaje emphasised that there were abundant export opportunities in the country.
“If you look at the structure of Nigeria’s Gross Domestic Product (GDP), you will see that huge opportunities abound in Nigeria.
“In terms of the structure of domestic production, we have done a good job of diversification but the problem is that in terms of the structure of exports and government revenue, we have not done enough,” he said.
The financial expert said that petroleum exports revenue represented over 90 per cent of Nigeria’s total exports revenue.
“So, clearly two things would happen: we would have to diversify our exports and domestically, government would have to diversify its income.
“From the point of business, there are still several sectors that hold promise for significant growth.
“For instance, look at the e-commerce space; look at Konga and Jumia (online shopping stores) and the growth that is going on in that sector.
“Look at the real estate, which accounts for about eight per cent of the GDP; look at the entertainment industry, which is the fastest growing sector in the Nigerian economy.
“Consider the success in manufacturing beverages and tobacco and cement, which also has a significant growth rate.
“Examine the hospitality, hotels, construction industry; all of which are growing above 12 per cent; look at the power sector, which also holds promises for the future,’’ he said.
Nevertheless, Mr Valentine Whensu, the President of National Association of Micro Finance Banks (NAMB), said that the Federal Government could shore up the dwindling value of the Naira by strengthening local industries.
He said that the reinforced industries would be able to increase their output and make the economy to become less dependent on imported goods.
According to him, when a country consumes more than it produces, there is bound to be capital flight with its attendant depreciation of the currency.
“When this happens, a lot of money is going over to foreign economies and you are inadvertently reducing the strength of your own currency.
“But if we strengthen our local industries and improve on agricultural production, this will make us to become an exporting nation.
“If we export more products, we earn more foreign exchange and our naira will also appreciate,’’ he said.
Whensu urged the Federal Government to make more investments in the micro-economic sector so as to enable the sector to play a more meaningful role in the nation’s economy.
He said that micro-economic activities accounted for about 79 per cent of every economy, adding, therefore, that a country’s economy would benefit a lot from exploiting the potential of the micro-economic sector.
Whensu said that the continuous drop in crude oil price in the international market was a clarion call to every country with an oil-based economy to make concerted efforts towards economic diversification.
All the same, economic experts underscore the need for increased investment in research on how to reduce Nigeria’s overdependence on oil as its economic mainstay.