NIGERIA WILL NEED MORE THAN OIL TO LIFT ECONOMY
While the oil sector continues to be a major source of the Federal Government’s revenue and export, the contribution of the oil sector to the economy (7.5%) has continually shrunk
Nigeria will get another chance this year to lay the building blocks of a long-touted transition away from oil and finally set the economy on the path to robust growth. There is a consensus among development economists and analysts that Africa’s largest economy is due for a new growth driver after several years of gorging itself on petrodollars.
“As the world shifts its attention to non-fossil energy sources, it is important that Nigeria gets its non-oil economic strategy right,” analysts at FBNQuest said. A non-oil economic strategy is simply a growth strategy that is not dependent on oil and it could mean either of several things, according to economists polled in a BusinessDay survey.
It could mean an investment-led growth whereby the government goes on an energetic pursuit of private capital to plug the gaps in infrastructure and several sectors of the economy. This would mean that the several challenges confronting the ease of business in the country are tackled once and for all, according to Muda Yusuf, former director-general of Lagos Chamber of Commerce and Industry (LCCI).
“If there were any doubts before, it is now well known that the government alone cannot create jobs for our fast-growing population and reduce poverty because it doesn’t have the resources,” Yusuf told BusinessDay. It is time we tried a more viable approach which is to allow the private sector to play the lead role while the government creates an enabling environment rather than compete with or stifle the private sector,” Yusuf said. The private sector is the primary source of jobs the world over, even in Nigeria.”
The quarterly job creation reports by the National Bureau of Statistics (NBS) show that public sector jobs accounted for a miserly 2 percent between 2009 and 2015, while private-sector jobs – a combination of formal and informal jobs accounted for 98 percent.
Another non-oil export strategy could be an export-led growth whereby the manufacturing sector is empowered to tap the export market in the way Vietnam did with good success. Among Nigeria’s top imports in the last 10 years are refined petroleum products and food. That has however started to change slightly in recent times with imports of machinery and equipment increasing but still not enough to suggest a booming manufacturing sector.
Another strategy Nigeria can adopt is one where investments are channelled towards human capital like education and health. The amount spent on fuel subsidy would have a better impact if education and health were subsidised. The World Bank is of the view that increased investment in human capital translates to higher economic prosperity.