Challenges in the non-oil sectors of the Nigerian economy, notably agriculture and solid minerals, are major investment opportunities for private sector operators, Abba Bello, managing director/CEO, Nigerian Export-Import (NEXIM) Bank, has pointed out.
The downturn in the international oil market, especially at the pick of economic recession in Nigeria, coupled with the country’s current economic structure and resource endowment, has revealed that the country has the capacity to boost its non-oil export revenues and promote sustainable inclusive growth and development.
This, more than anything else, explains the decision of the Federal Government to diversify the economy with emphasis and close attention to these non-oil sectors. But challenges remain.
The key challenges to developing these non-oil exports sector, according Bello, who spoke at the sixth convocation lecture of Achievers University, Owo, Ondo State, range from low productivity, particularly in the agricultural sector, to low value addition towards ensuring that better value is received from exports.
Non-oil sector played key roles in the Nigerian economy before and the immediate post- independence period. This time, non-oil exports, which were mainly agricultural and solid minerals, made up 97 percent of the country’s exports.
Crops like cocoa, cotton, palm oil, palm kernel, groundnut, and rubber were major export commodities. But between 1970 and 1974, non-oil exports dropped from 43 percent to 7 percent due to rapid increase in the international oil price and Nigeria’s production.
However, with the present state of the economy, the country needs to diversify its economy, as it has already undertaken, to achieve the diversification objectives and promote non-oil export growth, some decisive actions need to be taken.
Bello recommended that there should be increased capitalization of development finance institutions which is very necessary given that the real sector, particularly agriculture, solid minerals and, indeed, the export sector, require concessional long term funds for investment, which are rarely available in the commercial banking system.
“Human capital needs to be developed through increased funding to support education, particularly science and technology education, as well as promotion of research and development to enhance innovation and boost the competitiveness of our exports sector,” he said.
He explained that Science, Technology and Innovation (STI) policy needed to be fully implemented to enhance the level of funding to research and development, currently at 0.22 percent of GDP, according to data by UNESCO, thereby enhancing Nigeria’s intellectual property rights and patent registration.
Given the critical role of infrastructure in promoting value added exports, strategies should be evolved to support the establishment of industrial parks and build more/improve existing Export Processing Zones. This appears to be the fastest way to address the huge funding requirement to bridge the infrastructure gap, recently estimated at US$100 billion annually over the next six years by the Nigerian Infrastructure Concession Regulation Commission (ICRC).
He also recommended that, with the services sector contributing about 55 percent of GDP, there was the need to promote services export, especially exports of professional services, adding that there was need also to continuously improve the business environment not only towards attracting domestic and foreign direct investments to the country, but to enhance productivity and promote transparency.
“Given the efforts of the recently established Presidential Enabling Business Environment Council (PEBEC) and the release of Executive Orders by the Federal Government to improve service delivery in the public sector, Nigeria moved 24 places in the World Bank Ease of Doing Business Ranking from 169th position in 2017 to 145th position in 2018. Such efforts should be collectively pursued and sustained,” he advised.
