Need To Promote Nigeria’s Non-oil Exports

Need To Promote Nigeria’s Non-oil Exports

Nigeria’s dependency on oil exports for government revenue, 80%, and foreign exchange earnings, 87%, has long been at odds with the sector’s contribution of just 8.33% to the country’s gross domestic product, GDP. Over 89 million Nigerians live in poverty, and there is huge potential to leverage non-oil sectors to benefit them particularly in the aftermath of the global oil shock triggered by the COVID-19 pandemic, which has exposed Nigeria’s economic vulnerability.

Non-oil exports can transform the structure of the Nigerian economy, support its diversification and help address its perennial forex challenges.

Non-oil sector of the Nigerian economy can generally be described as groups of economic activities which are outside the petroleum and gas industry or not directly linked to them.

These include: telecommunication services; financial sector, banking and insurance, services; tourism service, hotels, restaurants, parks, carnivals, movies; wholesale and retail trade; Health services; export trade; agricultural activities; mineral activities; power, conventional and renewable; Manufacturing; environmental services, cleaning, waste collection and recycling; R&D activities; ICT, among others.

Each of these activities consists of various businesses which engage a large chunk of the population. For instance, Tourism consists of hotels and restaurants, resorts/recreation parks, cultural activities, carnivals, movie industry, arts and crafts, comedy and more.

When viewed from this background, the general assumption that the non-oil sector refers to agricultural and mineral activities is misplaced and makes the assessment of the sector narrow.

The potentials of the sector are great as shown, for instance, Nigeria has established itself as the largest telecom market in Africa, the tourism industry had an expansive capacity in terms of revenue and employment generation valued in excess of N1tn and it is currently generating about N150bn yearly, with 300,000 workers in its employ.

Direct employment in the non-oil export companies alone is estimated at about 200,000 while indirect employment in the agriculture sector which gains from the market linkages provided by the exporting companies is estimated at over ten million

Nigeria’s third quarter 2022 Gross Domestic Product, GDP, figures which showed that the non-oil sector dominated economic performance by contributing 94.34% to the nation’s GDP, while the oil sector contributed 5.66% in the preceding quarter is something to cheer about as it underscored the increasing importance of the non-oil sector.

The development showed that the Federal Government’s drive for economic diversification from the oil to the non-oil sectors, given the volatile nature of crude oil prices is yielding the desired results.

Nigeria’s oil sector, which is its major source of revenue, has been faced with a myriad of challenges in recent times. Crude oil theft, which is its major challenge, had hindered oil production in some terminals and affected the Nigerian National Petroleum Company Limited’s, NNPCL, ability to remit forex to the federation account.

To show how bad it was, official forex receipt from crude oil sales into the country’s external reserves had dried up steadily from above $3bn monthly in 2014, to absolute zero dollars presently.

In order to avoid such disruptions and diversify the economy by promoting activities in the non-oil sector, in 2020, the Federal Government rolled out a N50 billion Export Expansion Facility Programme, EEFP under the N2.3 trillion National Economic Sustainability Plan

The programme was designed to increase Nigeria’s export capacity in the near term and export volumes in the medium term by supporting exporters, especially Micro, Small and Medium Entrepreneurs, MSMEs.

The EEFP targets 16 programmes in five areas, including capacity building, financing, market development, infrastructure, and institutional strengthening.

The Central Bank of Nigeria, CBN, has played a significant role in boosting financing options for non-oil export value chains through several ongoing initiatives. Its N500 bn Non-oil Export Stimulation Facility is designed to enhance access of exporters to concessionary finance and attract new investments in value-added non-oil exports production, while N300 billion Real Sector Support Facility; Differentiated Cash Reserve Requirement Facility, seek to increase the flow of credit to the real sector of the economy. 

We urge stakeholders in different sub-sectors to take advantage of the enormous potentials in the non-oil sector to boost the nation’s economy which hitherto was substantially dependent on oil.

The various agencies including the Export Promotion Council must think outside the box on how to encourage exportable products and boost our economy.

AljazirahNigeria urges the government to continually evaluate the progress of its various non-oil exports interventions

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