March 21, (THEWILL) – The admirable drive to diversify Nigeria’s economy, which has remained built around oil revenue since the discovery of crude oil deposits at Oloibiri by Shell-BP in 1956, is a constant feature of the campaign manifestos of politicians during and after elections.
Over the years till date, receipts from crude sales have largely accounted for about 90 percent of the country’s foreign exchange earnings. Yet, beyond the whims and caprices of the political class of the day, the very real need for economic diversification is as pertinent in our contemporary existence as it has ever been previously.
Over-reliance on oil revenue is not only inimical to the need to become a self-sustaining nation, but also ties the progress or otherwise of the country’s development to the unpredictability of a highly volatile oil and commodities market that is prone to rising and falling based on circumstances often dictated by global events beyond our control.
For the country’s mainstay to be so intrinsically dependent on such distant but weighty circumstances as a border war between Iraq and Kuwait, which started in 1990 and snowballed into a major war the following year, or more fickle circumstances, such as a tweet from former American President Donald Trump making light of the alleged murder of Washington Post journalist, Jamal Khashoggi, by agents of Saudi Crown Prince Mohammed bin Salman, should be a constant source of worry for every right-thinking Nigerian.
That the country’s entire budget is tied to the undulating nature of crude oil prices should be cause for sleepless nights. Nigeria’s crude oil proceeds fell by 41.60 per cent in the first quarter of 2021 to $6.48 billion from $11.1bn in the first quarter of 2020. These are the types of statistics that drive the message home for the leaders and citizens to be of one mind in the effort to wean the country off of its over-dependence on a mono-economy.
Despite several bold-faced attempts to reduce Nigeria’s reliance on oil through campaigns of economic diversification, backward integration and industrialisation, which have been supported with targeted loans, numerous reforms and sets of policy initiatives, oil remains the mainstay. As a result, billions of naira that could have been ploughed back into the economy for expansion and growth have whittled away through imports that created jobs for other economies instead of ours and further impoverished our citizens.
Therefore, to stem this tide, Nigeria must be serious with the implementation of the backward integration and diversification policies, as well as prioritise her structural industrialisation revolution.
It saddens me that we did not take these policies seriously until recently. The biggest obstacle to the policies is the country’s epileptic public electricity. No real growth and progress can be achieved if we do not find a permanent fix to this perennial problem occasioned by decades of neglect, lack of investment and corruption.
This is why the boldest move yet to turn around the country’s electricity misfortune was greeted with cheers when the Muhammadu Buhari-led Federal Government and the Angela Merkel-led government of Germany on July 22, 2019, signed a Government to Government Agreement to revamp our power generation and distribution infrastructure over a period in three phases that will lead to the ultimate generation of a massive 25GW of electricity. Nigeria has already paid its counterpart funding of 15m euros and N1.708bn naira to Siemens, the contractor, which is scheduled to complete the project by 2025.
Despite the ongoing project, which I understand is going as planned, the recent collapse of the national power infrastructure and the astronomical rise in the price of diesel to run power generators are reminders that we are still miles away from being sufficient in power generation and distribution.
Policy makers must forge ahead aggressively with the economic diversification and industrialisation agenda, though we must be reasonable, practical and systematic in the approach.
For a country like Nigeria, where unrestrained borrowing threatens to jeopardise the future of generations yet unborn, such a programme must involve a systematic and determined process of eliminating the importation of raw materials and finished products, as well as goods and services, which will be correspondingly replaced by homegrown alternatives. The comprehensive nature of such a programme will include a project of ramping up local capacity to come within the limits of satisfying local demands and possibly external demands as well, in the long run.
The remote and immediate gains from a system of producing and manufacturing here in Nigeria goods that are currently being imported will be the catalyst for economic diversification with its resultant advantage of savings of foreign exchange outflow, while it increases job creation, allows for value retention, provides capital incentives and monetises the growing population estimated to be around 200 million people.
We must reject a system where capital exiting the country far outstrips inflows, which has been going on for decades without any serious and genuine effort to halt the trend.
According to the National Bureau of Statistics, between January 2017 and March 2021, Nigeria spent N40.94tn on the importation of manufactured goods while earning just N4.22tn on exports of manufactured goods within the same period. It is no surprise that Nigeria’s exports were dominated by crude oil. In that period, the nation exported N49.31tn worth of crude oil, compared to manufactured goods that only earned it that comparably measly sum of N4.22tn. Such a shortfall must not be allowed to persist further.
This is why every well-meaning Nigerians should support the targeted policies of the Godwin Emefiele-led Central Bank of Nigeria, whose main aim is to wean the country off reliance on foreign imports and crude oil as the only major sources of foreign exchange. The implementation of the policies will bring pain and inconveniences at the onset, but surely the gains overtime for Nigerians and the country in general will be worth it.
I must say that I was glad and impressed listening to the inaugural speech of Professor Charles Soludo, the economist and former Governor of the CBN, who is now Governor of Anambra State. This is the kind of thinking and mindset that our leaders should bring to governance.
In his address, Soludo christened himself the “Chief Marketing Officer of everything Anambra” with a pledge to support state-grown goods and services and to only obtain anything outside “Made in Anambra” when it is not available within the locally available options. It is that mentality that must pervade our consciousness as a country as we drive towards diversification and industrialisation.
Although it is true that Nigeria is a signatory to various trade deals and had also signed on to the African Continental Free Trade Area (AfCFTA) deal that aims to boost intra-African trade by providing a comprehensive and mutually beneficial trade agreement among the member states, covering trade in goods, services, investment, intellectual property rights and competition policy, the country must engage its best minds, of which there are many, to drive its diversification and industrialisation policy for the benefit of the country.
About the Author
