What progress has Nigeria made in terms of fostering greater economic diversification?
BABATUNDE PAUL RUWASE: Nigeria has made very appreciable progress in several sectors. The most significant of these has been in agriculture, where big strides have been made in rice production. Foreign exchange (forex) is relatively stable now, and this has had a noticeable impact on the ability to diversify. The Economic Growth and Recovery Plan is also well on course. However, in addition to issues of forex and security, the lack of electrical power needs to be addressed head-on. Nor can we underplay the effect of the gridlock in Apapa, the largest seaport in the country. The consequences of this problem include the loss of manpower, increased cost of funding, and difficulties related to moving goods in and out of the country. This affects the production line, creating scarcity and elevating prices.
In addition to low accessibility to the port, levels of efficiency in the port area are particularly low. In order to optimise logistics, our rail infrastructure has to be developed further. Even if road repairs were to scale up, bottlenecks will remain an issue without a comprehensive rail solution. As for petroleum products, better pipelines are essential, since they are much more effective than tankers, which are a big part of the gridlock issue. Technology, including unmanned aerial vehicles, will help achieve better pipeline security.
How can Nigeria unlock the full potential of its manufacturing sector?
RUWASE: The manufacturing sector, while relatively insignificant in terms of contribution to GDP, is seeing notable development in Nigeria. However, the main constraint for manufacturers is the lack of adequate power, which leaves them largely dependent on diesel. Since diesel prices are high, and as diesel is a deregulated product, the recent increase in international oil prices – which has boosted other segments of the economy – has made it more expensive for the manufacturing sector to operate. Local refineries, which are expected to increase the Nigerian capacity to produce inputs domestically, will only insulate against these oil price hikes to some extent, as the main consequence will be that costs go down due to lower logistical costs; even domestically produced diesel will be subject to global oil prices. An additional challenge is that local manufacturers have to contend with the dumping of cheap, low-quality products.
Which sectors are the most dynamic in terms of job creation and local value addition?
RUWASE: Agriculture remains the largest sector in terms of employment, and future employment growth will continue to come largely from this sector. The service and distributive sectors are also contributing greatly to GDP, and there is a lot of potential to expand their scope, even across the border. Those sectors are not always given the attention they need or deserve; for example, when it comes to preferred forex rates, manufacturing and agriculture are prioritised. ICT growth is significant, although certain technologies like financial technology are likely to reduce employment while improving productivity. The growth of technology companies as a whole is a very positive development, as the acquisition of new skills and opening of greenfield areas will have a knock-on effect across the board. The mining sector, however, remains underdeveloped.
How can greater numbers of both foreign and domestic investors be brought into the real economy?
RUWASE: The government needs to create a stable environment. This entails most of all predictability and consistency, with no sudden policy shifts. The government should also try to create an interface for business-to-business meetings. With minimal bureaucratic interference, business-friendly policies, confidence in the security situation and a clear respect for legislation, many more investors will be attracted to Nigeria.
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