One of the often heard economic policies of President Muammadu Buhari administration is how to diversify Nigeria’s economy as an alternative means of revenue generation owing to the fluctuation of the international oil market. The need for government to look beyond oil money to finance its much expected socio-economic pact with Nigerians as encapsulated in Change Agenda is therefore on the front burner.
Recently, the president stated in far away China that his government was determined to focus on diversifying the economic base of the country. Through his Senior Special Assistant on Media, Mallam Garba Shehu, Presiden Buhari emphasized that time was long overdue to diversify Nigeria’s economy adding that the continued reliance on crude exports had always made the economy vulnerable to shocks. The president made the statement while calling on the Chinese government, foreign investors and local business men to support Nigeria’s efforts to diversify the nation’s economy.
“This time we will be more deliberate. The government and businesses will be involved,’’ Buhari said.
In a related development, at the 7th Stanbic IBTC Bank Investors Conference which had the theme “Unlocking Nigeria’s Potential…growing through diversification” held at Eko Hotel and Suites, Victoria Inland, Lagos on February 23, 2016, Dr. Yemi Kale, the Statistician General of the Federation/Chief Executive Officer, National Bureau of Statistics, who was a gets speaker had highlighted the benefits of diversifying Nigeria’s economy.
According to him, “The benefits of improved diversification are clear. Firstly, we are all aware of Nigeria’s vast potential despite current challenges. Nigeria ranks among the most richly endowed nations of the world in terms of natural, mineral and human resources. Nigeria has a variety of both renewable and non-renewable resources, some of which have not yet been effectively tapped. Solar energy, probably the most extensive of the underutilized renewable resources, is likely to remain untapped for some time, and the vast reserves of natural gas produced with crude oil have yet to be fully utilized.
It is indeed pertinent to ask: What has necessitated the current renewed efforts at economic diversification? How can it be achieved? What are the challenges that must be surmounted? Are there deliberate policy in this regard? What are the institutional frame work towards achieving economic diversification?
Dr. Kale said that, “The prevailing economic situation has prompted Nigeria to work harder to further diversify our economy as well as government revenue. Yes, our economy is relatively diversified. However, almost half of the economy is informal and out of the (fiscal) control of government. Policies aimed at drawing in this huge informal sector into the system must necessarily be deployed at this time if we are to diversify our sources of revenue and achieve a more sustainable structural transformation of our economy.
“Nigeria has over 34 discovered solid minerals, including significant uranium deposits, abundant arable land and over 44 exportable commodities. With such an abundance in human and natural resources, Nigeria really should be one of the most diversified and competitive countries in the world. However, as aforementioned, Nigeria has historically been heavily dependent on a narrow range of traditional primary products and relatively few export markets for the bulk of its export earnings. Diversification in exports and in domestic production will accordingly be conducive to faster economic growth.
There are institutional factors in the issue of economic diversification that should be seriously considered if indeed the government is serious and sincere about the policy. Interestingly, each sector has agencies that implement and regulate policies of government.
Promoting exportable goods and services
The Nigeria Export Promotion Council, NEPC, for instance is an agency of government established for the purpose of developing zero oil plan to increase. The NEPC is designed to create market for Nigerian non-oil products worldwide. Its mission is “to spearhead the diversification of the Nigerian economy by expanding and increasing non-oil exports for sustainable and inclusive economic growth”. Operationally, the overall strategy is to ensure diversification of non-oil produce, “foster market -oriented, private sector-driven economy through market oriented export products development”. The question is: what is the current capacity of NEPC towards delivering it’s mandate? Has it been properly funded by successive administration towards actualising it’s core mandate?
Recently at a programme in Edo State, the Executive Director of NEPC, Olusegun Awolowo, represented by Barr. Ezra Yakusak, made a projection recently that Nigeria’s earning on non-oil export will hit $25bn by 2025 through a ‘zero pile’ strategic plan. This plan, he said, is capable of shooting up the total value of Nigeria’s world export in strategic sector in 10years time by 5percent thereby reducing dependency on oil.
“The zero plan is a coherent agenda to mobilize the public and private resources towards replacing oil as our number one resources of foreign exchange. Under this plan, Nigeria will position itself to gain at least a 5 per cent share of total value over the next 10 years to ensure sufficient scale of production and prevent sudden market distortions”, he said.
Through trade information on international on export, national export, policy and strategy, product development, product development, export development and incentives, articulation and promotion of implementation of export polices and programmes of the Nigerian government, among others, the Council carries out its operation. But without a “deliberate” government effort as President Buhari noted, the Council will not be able to realise it’s mandate.
NEPC organises and plans the participations of Nigeria in international trade fairs and exhibitions in other countries, pan and organise outward trade missions, dissemination of both domestic and international commodities prices, as well as publication and servicing of trade enquiries and opportunities from within and abroad. Exportable products include agricultural produce, consumer and industrial goods, sold minerals, services and packages. Entertainment, music, movies, ICT, software development and BPO, and education are all exportable goods and services with the capacity to attract huge national revenue in hard currency. It s therefore imperative to enhance its operations towards helping government actualise economic diversification programme.
Industrialisation through research in science and technology
Another government agency that is very important to economic diversification is Raw Material Research Development Council, RMRDC. It is one agency that can assist the government in its economic diversification drive through extensive research into raw material resources thereby laying a solid foundation of Nigeria’s industrialization.
For instance, at the 35th Kaduna International Trade Fair, one of the high points was the display of fabricated fertiliser bending plant which was a product of collaboration between RMRDC and the National Research Institute for Chemical Technology (NARICT), Zaria. Instructively, the Director-General of RMRDC, Dr. Hussaini Doko Ibrahim, during his remark at the event emphasised the point that “RMRDC has never left anyone in doubt over its commitment to the diversification of the economy… The historical background of RMRDC since 1988 when it was established had been trailed by a prevailing industrial sector of a mono-economy (oil) from the early 1980s that depended on imported raw materials and spare parts and goods and services. Ninety percent of the economy depended on national revenue derived from sales of petroleum.
After series of brainstorming sessions by stakeholders, it was agreed that the way out is to set up a council whose mandate, according to Dr. Ibrahim, is “to promote support and expedite industrial development and self-reliance through optimal utilization of local raw materials as input to the nation’s industries”. He said the Council’s participation in trade fairs and exhibitions was one of the platforms they had used to create awareness on raw materials availability, investment opportunities and to provide relevant information geared towards the realization of private investment in resource based industries.
Though industrialization and development called for a focused promotion of investments in the key sectors of the economy, the harnessing and development of the available local raw material are very crucial in that process. The RMRDC can develop a framework for adopting the Micro,Small and Medium Enterprises cluster as a strategy for socio-economic development
Tourism sector development
Another sector that is waiting for full national investment attention is tourism. Many African countries such as Kenya, Ethiopia, Zambia are relying on tourism as a major source of revenue generation; yet, Nigeria is said to have more tourism potentials than many of these countries but the sector is yet to be fully harnessed. Last year, the Director-General of Nigerian Tourism Development Corporation, NTDC, Mrs. Sally Mbanefo, stated that Nigeria’s domestic tourism market is worth $4billion. But this will not be realized unless the sector is properly funded towards achieving this end.
The sector, said Mrs Mbanefo is capable of boosting economic growth for the country in the face of dwindling oil price at the international market. “It is an important tool in promoting economic growth, alleviating poverty, job creation, and contributing to national development goals.”
At the Nigeria Tourism Investors Forum and Exhibitions organised by the Federation of Tourism Associations of Nigeria (FTAN), in collaboration with the Federal Ministry of Tourism, Culture and National Orientation and the Federal Capital Territory Administration (FCTA) in Abuja, the DG who spoke on ‘Promoting domestic tourism: Tool for National Economic Development’, she said “In 2013 Osun Osogbo festival recorded 21,713 domestic tourists including, 123 international tourists while N58,230, 170 formed the expenditure. Abuja Carnival (2013) recorded 19,015 domestic tourists, which include 113 international tourists while N147, 385,250 formed the expenditure. Religious tourism recorded over a million domestic tourists and a substantial number of international tourists in 2013.”
She added that “It is estimated that, we have a US$ 4 billion domestic tourist market. Similarly, the size of the Diaspora market is estimated at US $3 billion annually should we provide them with the right environment considering the volatility of oil revenues which is currently a major source of the nation’s revenue. To overcome some inherent socio-economic challenges in the sector, there is need to have good access roads to the various tourist destinations, review the Land Use Act to enable private sector access land for development of tourist sites, corporate and multinational organisation should adopt tourist sites for development, resolve multiple taxation for tourism operators and establish a Tourism Development Fund (TDF). What the NTDC needs is to be properly repositioned and funded.
As Nigeria’s last GDP estimates sector by sector indicate, there is a need for deliberate policy by the government of the day if it truly wants to diversify the economy profitably. It is therefore important to draw a comprehensive roadmap for economic diversification.