In order to find solution to the economy downturn, the Federal government has been advised to diversify the economy.
The President of Chartered Institute of Bankers of Nigeria (CIBN), Professor Segun Ajibola suggested that Nigeria has great capacity for diversification of its economy, even though most of the strategies targeted towards the achievement of this objective have not yielded the desired results over the years.
Ajibola, who stated this at 80th anniversary of International Commercial Terms (INCOTERMS) in Lagos, said that there is the need for government at all levels to show strong commitment to the diversification of the Nigerian economy from oil.
“Even within the oil sector, he said there are still huge untapped potentials for diversification which the country has not adequately harnessed. For instance, apart from its current narrow use by the country, it has been proven that over 6,000 items can be manufactured from petroleum by-products. Some of these include fertilizer, linoleum, perfume, insecticide, petroleum jelly, soap, vitamin capsules and so on. The sector itself holds a lot of potentials for export and foreign exchange earnings.
According to him, this would involve establishing a task force that would review other countries’ examples who had been in a similar situation like ours and leapfrog by learning from their experiences.
In paper entitled, “Impact of protective policies on non-oil exports and imports – the Nigeria, experience (1986 to date),” he said the neglect of agriculture as a critical sector of the national economy has had unsavoury impact on employment, balance of payments and other macro-economic variables of Nigeria over the years.
He noted that the capacity of the agricultural produce to compete on the global market for foreign exchange earnings is still very low.
Ajibola attributed this to poor processing and packaging standards of the agricultural products which continue to affect their ability to meet international benchmarks.
He stated that, presently, over 90 per cent of the country’s foreign exchange earnings are derived from oil and gas, while the sector contributed about 8.26 per cent to the country’s Gross Domestic Product (GDP) as at second quarter 2016.
“This, therefore, places the country in a precarious position and exposes its economy dangerously to volatilities in the global oil market,” he added.
Also, speaking at the event, Chairman of the International Chamber of Commerce Nigeria (ICCN), Mr. Babatunde Savage said that Nigeria currently has large, untapped investment opportunities in various sectors of its economy, including mining, agribusiness and services.
Savage explained that the agricultural sector, other non-oil sectors have not also been able to generate the desired level of foreign exchange earnings for the country even though their contributions to GDP have improved materially in the last few years.
He pointed that the manufacturing sector in the country has been bedeviled by factors such as poor power infrastructure, insecurity, poor local patronage, smuggling of substandard goods into the country, lack of requisite skills, bureaucratic bottlenecks for licensing and operations and poor access to and high cost of finance (interest rate), adding that all this contributed to the high cost of doing business and poor quality output from local firms.
He called on the government to support the Small and Medium Sized Enterprises by providing the enabling environment for business growth and production of goods and services that would compete favourably in the global market.