NIGERIA@61: Successfully Exiting Sole Dependence On Oil

NIGERIAat61 Successfully Exiting Sole Dependence On Oil

By Jantiku Ijanada

Nigeria has been a mono product economy for as far back as independence. And like other OPEC countries, it has crude oil as it’s major contributor to the country’s revenue. Nigeria’s economy and budgets have been largely supported from income and revenues generated from the petroleum industry since the 1960s.

With so much emphasis placed on the oil sector, other sectors which would have contributed in giving the economy a positive global outlook, if attended to, were neglected. This did not seem to be an issue at the time, until we started experiencing a reduction in crude oil production and fluctuations in the price of crude oil which followed a downward trend.

The country’s dependence on oil resources as a source of foreign exchange earnings to the detriment of agriculture which was earlier considered a blessing became our albatross.

Various governments have, time and again, tried to diversify the economy away from crude oil. All to no avail. This has been our plight for the past 40 years.

Whether or not the country is making progress in moving away from oil dependence to a more diversified economy 61 years after independence, is the main thrust of this piece.

The National Bureau of Statistics’ (NBS) report for the first quarter of 2021 showed that Nigeria’s Gross Domestic Product(GDP) grew by 0.51% (year-on-year) in real terms. In the quarter under review, Nigeria’s average daily oil production stood at 1.72 million barrels per day (mbpd), lower than the normal daily production of 2.5mbpd. The oil sector contributed 9.25 percent to real GDP, while the Non-oil sector accounted for 90.75% of aggregate GDP in the first quarter of 2021.

The country’s GDP further grew by 5.01% in Q2 2021 following 0.51% growth in Q1 2021. The contribution of the non-oil sector to GDP increased from 91.07% in Q2 2020 to 92.58% in Q2 2021. This growth was driven mainly by Trade, Information and Communication (mainly Telecommunications), Transportation, Electricity, Crop Production and Manufacturing.

The NBS report for Q1 and Q2 of 2021 shows that while the oil sector is recording a gradual and consistent decline, the non-oil sector on the other hand is becoming more robust contributing significantly to the economic performance in Q2 2021 with growth of 6.74% in real terms, the fastest growth in the sector since the third quarter of 2014.

It is obvious that the non-oil sector under this administration is picking up against the crash of crude oil. The country which was largely dependent on oil is gradually changing trend as non-oil sector is seen to be contributing more to the country’s revenue.

The growth in the non-oil sector did not magically happen. It is as a result of President Muhammadu Buhari’s deliberate planning and inputs in terms of programmes, policies, incentives and interventions. Some of the drivers that aided the performance of the non-oil sector are: Agricultural Promotion Policy (APP); Presidential Fertilizer Initiative (PFI) and the Anchor Borrowers’ Programme(ABP) targeted at creating a linkage between processing companies and smallholder farmers to boost production and processing of Agricultural commodities amongst others; the Textile Sector Intervention Facility aimed at reviving the cotton, textile and garment industry amongst others.

The Central Bank of Nigeria (CBN) interventions also contributed in the area of boosting credit to the private sector through the recent Loan-to-Deposit Ratio (LDR) and Global Standing Instruction (GSI) initiatives. These are aside from the sustained interventions by the Bank in selected employment and growth-enhancing sectors, as well as fiscal policy measures to support growth.

And of course there is the Economic Sustainability Plan, ESP launched with a

stimulus package of N2.3 trillion to boost local production, prevent businesses collapse and provide liquidity across various sectors, especially micro, small and medium enterprises MSMEs, not to mention the loans given to farmers and traders to boost production and businesses respectively.

In addition, there is the formalization support under the MSME Survival Fund which involved free business names’ registration for 250,000 MSMEs nationwide by the Corporate Affairs Commission (CAC) amongst others.

In an attempt to further dissect the performance of the non-oil sector under the leadership of President Muhammadu Buhari and the the APC, the Senate President, Ahmad Lawan while speaking at the inauguration of a Poultry Farm Centre established by the National Agricultural Land Development Authority (NALDA) at Gasamu, in Jakusko Local Government Area of Yobe State, said that President Buhari has done more to diversity the economy than any past leaders.

He noted that: “We have promised to diversify the economy of this country. For more than 50 years, our economy had been dependent on one single commodity and that is oil. Oil does not provide so much employment opportunities.

“So we are diversifying the economy of Nigeria through agriculture and we have done so much as a country, as a government, in the last six years or so. No previous administration in Nigeria has committed as much funds, resources in agriculture as this administration”.

He added, “I stand to be contradicted that if not because of resources that we have put in the agriculture sector, Nigeria would still have been importing the food that we eat. But everyone knows that the rice import bill have gone so low, almost to nothing today.

“We used to spend billions of dollars every year to import rice, but we have been producing the rice that we eat.”

These are all testimonials of President Buhari’s agenda to diversify the economy as promised; the various policies of the administration, aimed at boosting agricultural production, improving the business environment and investing massively in infrastructure, are beginning to yield positive fruits.

What other administrations could not achieve over the years, President Buhari is making a headway. We might not have attained a fully diversified economy; revenue base, but we are better than what we used to be, we are on the right path, and if we continue on this path, who knows, we might get there sooner than later.

On our part as patriotic citizens of this great nation, it behoves on us to take advantage of the various Federal Government programmes and policies in the non-oil sector(especially in agriculture), and invest appropriately. By so doing, we will not just create more direct and indirect jobs but also support and complement the government’s effort to undo our negative reliance on oil.

Ijanada writes from Abuja

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