Home Column Where is Nigeria in its economic diversification ladder?

Where is Nigeria in its economic diversification ladder?

by Business News Report

Nigeria in the last 40 years or so has embarked on one economic reform or another with the slogan of economic diversification. It started with General Yakubu Gowon’s accelerated food production, and then General Obasanjo’s operation feed the nation. During the tenure of President Shehu Sagari, the slogan was Green Revolution and that of Genral Babangida was anchored on Directorate for foods roads and rural infrastructure DIFFRI which of the driver of the Structural Adjustment Program SAP. The National Economic Empowerment Program NEEDS, of the second coming of President Olusegun Obasanjo became the focus in his second term in office.

President Umaru Yar’Adua came up with the seven point agenda while Jonathan fashioned his own as transformation agenda.  Today the economic gospel of President Mohammudu Buhari is looking inward and denial of 41 items from access to foreign exchange. It is hinged on reflating the economy.

In all of these, the nation seems to be moving in circles and has not moved much forward Nigeria as a country is yet to achieve any measure of sustainable economic success in these efforts at diversification of the economy. It is appalling that all these years Nigeria still depends on importation of even basic food items. It is not due to lack of ideas, but basically because of lack of political will to the right thing at the right time. There is no commitment of the political class to develop the nation vast economic resources. Many believe in the rental economy where the lazy and well connected make over night as commission agents, land speculators and portfolio contractors/businessmen.

The recent data on the nation’s merchandise shows that it is talks, motion and no action or progress in the economic arena. According to data released by National Bureau of Statistics on Nigeria foreign trade for the first quarter of 2016, the total value of Nigeria’s merchandise trade stood at N2.7239 trillion. From the preceding quarter value of N3.5174 trillion, this was N793.5billion or 22.6 per cent less. This development arose due to a sharp decline in both imports and exports. Exports saw a decline of N671.1 billion or 34.6 per cent, while imports declined by N122.4 billion or 7.8 per cent. The steep decline in exports brought the country’s trade balance down to – N184.1 billion or N548.7bilIion less than in the preceding quarter. The crude oil component of total trade decreased by N716.7 billion or 46.6% against the level recorded at the end of 2015.

Sadly, the bulk of the nation’s export remains crude oil. Where has all the reforms embarked upon since independence led the nation? Is Nigeria reinventing the economic will, certainly not? If the Asian tigers, Japan with no natural resources can become global economic power houses, why not Nigeria.

It is disappointing that after several years of imposing untold hardship on the Nigerian people in the name of reforms that the value of the export trade totaled N1.2699 billion in the first three months of 2016 showing a decrease of N671.1 billion or 34.6 per cent, over the value recorded in the preceding quarter. Year-on-Year analysis shows that the country’s exports dropped by N1.3952 billion or 52.3 per cent against the export value recorded in the corresponding quarter of 2015. More worrisome is the fact that the structure of Nigeria’s export trade is still dominated by crude oil exports, with the contribution of crude oil to the value of total domestic export trade amounting to N821.9 billion or 64.7 per cent. Exports by section revealed that the highest export product for Nigeria during the period was “Mineral products” which accounted for N1.0541 billion or 83.0 per cent. Other products that contributed the most to Nigeria’s exports include “Vehicles, aircraft and parts thereof; vessels etc.” and “Prepared Foodstuffs; beverages, spirits and vinegar; tobacco” whose values stood at a mere N72.7 billion or 5.7 per cent, and N63.6 billion or 5.0% respectively, of the total exports from Nigeria for the quarter Exports by continent showed that Nigeria mainly exported goods to Europe and Asia, which accounted for N467.1 billion or 36.8% and N360.6 billion or 28.4% respectively, of the total export value for Q1, 2016. Furthermore, Nigeria exported goods valued at N161.3 billion or 12.7% to the continent of Africa while export to the ECOWAS region totaled

Also the latest quarterly Economic Report from the CBN puts non-oil exports provisionally at $1.02bn between January and March 2016, indicating an increase of 39 per cent from the preceding quarter but a 44 per cent decrease on a y/y basis. The fall in receipts on a y/y basis can be traced to the steep decline in receipts from industrial and agricultural export products. The largest proceeds came from manufactured products, which earned $546m.

The breakdown by sectors in the first three months of 2016 shows that proceeds from manufactured, agricultural and industrial products accounted for 53.8%, 8.6% and 25.1% respectively. The Nigerian Export Promotion Council (NEPC) recently disclosed another strategy, known as “the zero oil plan” geared towards boosting the country’s non-oil exports. The plan identifies 21 priority countries as markets for Nigerian products termed “Export 21” and eleven strategic export products. These include palm oil, cocoa, soybeans and rubber.

While the various arms of government are struggling to increase products that can be exported enough attention is not paid on packaging and quality. The European Union recently extended its ban on importation of dried beans from Nigeria by three years. The extension came when the federal government and its relevant agencies were working to ensure that the June dateline to lift the ban was met. The EU banned importation of Nigeria’s dried beans in June 2015 on the ground that the produce contained high level of pesticide considered dangerous to human health. Nigeria was accused of not doing enough to lift the ban during the period of suspension by the EU. “The continued presence of dichlorvos (pesticide) in dried beans imported from Nigeria and maximum residue levels of pesticides shows that compliance with food law requirement as regards pesticide residual cannot be achieved in the short term.

The food items banned from Europe till June 2016 are beans, sesame seeds, melon seeds, dried fish and meat, peanut chips and palm oil. The European Food Safety Authority had said that the rejected beans were found to contain between 0.03mg per kilogramme to 4.6mg/kg of dichlorvos pesticide, when the acceptable maximum residue limit is 0.01mg/kg. The EU had warned Nigeria that the banned food items constituted danger to human health because they “contain a high level of unauthorised pesticide“. So far no government institution has accepted responsibility for this fiasco and no one is being questioned for failing to do the right thing. As the nation continues to suffer one embarrassment after another because some civil servants will not do their jobs, the path to economic diversification continues to suffer undue set back.

When will the economy be fully diversified and who is that economic messiah that will carry Nigerians on this path of sustainable development. The search continues.


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