Amid the backdrop of rising uncertainty around the globe, Nigeria managed to pick up a 3.54 per cent growth in the second quarter (Q2) of the year. The Q2 performance is 43 basis points (bps) ahead of the previous quarterly data and a slight top-up of the 3.4 per cent yearly growth projected by the International Monetary Fund (IMF).

The outlooks of several regional economies are blunted by rising uncertainty, spiraling prices and geopolitical tensions. These are already pulling growth figures towards the negative territory. For instance, the world’s largest economy contracted by 0.6 per cent in Q2, coming after a steep 1.6 per cent slump in Q1. In the same period, China’s growth waned to 0.4 per cent from 4.8 per cent in the previous quarter, forcing its central bank into monetary easing.

Europe is currently on the brink, fighting to stave off recession. The United Kingdom’s economy shrank 0.1 per cent quarter on quarter in Q2 as its gropes through one of its darkest moments in recent history. Back in Africa, growth data are revealing scanty investments and weak consumer spending amid cost of living crisis that has sent many economies spiraling. This suggests that the Nigerian data, on paper, are not as bad as expected.

But the figures reflect the historical structural imbalances that have endangered the economy’s capacity ultilisation and reduced the country to a consuming economy – a situation that has triggered persistent unemployment and foreign exchange crises. Crude, the mainstay of the public revenue, contributed only 6.33 per cent of the gross domestic product (GDP) while non-oil retained 93.67 per cent. These figures almost reverse when it comes to budget funding, and this dates back to as far as one can remember.

Speaking at the 33rd Seminar for finance correspondents and business editors held concurrently in Abuja and Lagos at the weekend, economists said deliberate efforts must be made to address these imbalances such that both sectors can contribute equally to FX earnings and public revenue. The experts picked RT200 FX Programme and other development roles of the Central Bank as a pointer to likely policy the government could explore to consistently improve the contribution of non-oil to FX earnings.

RT200 FX Programme aspires to raise earnings from semi and fully-processed non-oil exports to $200 billion in the next three to five years. The programme is anchored on five strategic pillars considered key to breaking the barriers to non-oil exports.

At the seminar tagged, Policy Option for Economic Diversification: Thinking Outside the Crude-Oil Box’, a leading economist, Dr. Biodun Adedipe, said the current structure is hostile to inclusive growth, adding that “a cocktail of policy options” must be adopted to break the jinx to position the economy for sustainable growth.

After a country-by-country review, Adedipe said Nigeria is about the only commodity economy that has not leveraged its resources to support and build other sectors. He warned that Nigeria could not carry on with the concentration risk posed by hydrocarbons without deliberate efforts to diversify. He recalled suggesting to the government on tying proceeds of oil sales to infrastructure funding while revenue from non-oil goes into recurrent expenditure, saying the recommendation provided a practical process for breaking the jinx of Dutch Disease.

Read more at: https://guardian.ng/business-services/diversification-as-necessary-policy-option-for-de-risking-nigerias-economy/

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