Imperative of Economic diversification

The recent declaration by the Minister of Mines and Steel
Development, Arc Olamilekan Adegbite, that the federal government is committed
to diversifying Nigeria’s  from oil to agriculture and  could not have come at a better time than now. There is no doubt that Covid-19 pandemic has
made it compelling for countries around the world to explore ingenious means of
survival, a necessity for which Nigeria cannot be left in the lurch.

The minister, who stated this in Ibadan during a courtesy visit on Oyo state governor, Engr Seyi Makinde, stressed that the federal government is presently encouraging state governments to embrace the diversification. Specifically, the minister disclosed that the essence of his visit to Oyo state was to spread the gospel of mining to the state as part of the moves towards ensuring diversification of the nation’s economy.

“We are in Oyo state essentially to spread the gospel of mining all over Nigeria. President Buhari, since assumption of office, has tried so much to diversify the economy, especially through the mining sector and agriculture. We have relied so much on oil and gas and whenever the vagaries of the oil prices happen in the international market, Nigeria catches the cold; our economy is in tatters,” he said. The minister added that to avoid over-reliance on the oil sector there was massive injection of efforts and campaigns into agriculture, which has started yielding results.

“We are in Oyo state to bring and to let people know more about what we are doing in the sector. At the same time, we have been doing a lot of international road shows. We go there and publicise mining in Nigeria. Nigeria is known for oil and gas and it is very difficult to convince people otherwise that mining can thrive in Nigeria. But we are getting some traction because of the investment that has been put into the exploration of minerals in that sector,” he said.

Welcoming the minister, Governor Makinde emphasised the need for the federal government to diversify the by tapping the benefits available in the mining industry and curb activities of illegal miners across the country.

Corroborating Adegbite’s assertions, the Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, declared recently that unfolding events of the past few months, the coronavirus pandemic and the oil price war have further reinforced the federal government’s resolve to diversify the national economy. She said that one of the ways of doing so is to develop a vibrant commodities trading ecosystem.

Ahmed spoke in Abuja at the opening of a two-day International Conference on the Nigerian Commodities Market (ICNM 2020), organised by the Securities and Exchange Commission (SEC), where the Vice-President, Prof. Yemi , also noted that the conference underscored the readiness of the government and other stakeholders to partner in order to explore opportunities and take the nation’s commodities market to the next level.

In her address at the conference with the theme, “Commodities Trading Ecosystem: Key to Diversifying the Nigerian Economy,” the minister recalled that several national plans, programmes and projects have been directed at diversifying the production and revenue structures of the economy. She said while some level of achievements have been recorded, more still needed to be done to ensure that production and exports base become more robust, less vulnerable to external shocks and provide more opportunities to the teeming population.

“Interestingly, the unfolding events of the past few months, the coronavirus pandemic and the oil price war have further reinforced our resolve to diversify our national economy,” adding that the country is well endowed with various commodities, comprising agriculture, energy and metal resources. For instance, the agriculture sector employs about 40% of our labour force and accounted for 22% of the country’s GDP at the end of 2019. In the last five years, the sector has recorded positive growth rates, higher than that of the entire economy, and even positive in 2016 when the entire economy went into recession.

“The mining and quarrying sector, dominated by oil and gas, is also a major component of our output, accounting for 9% of GDP. The sector is responsible for the bulk of Nigeria’s foreign exchange and government earnings. A further examination shows that commodity-dependent activities dominate our manufacturing sector. Specifically, production of food, beverage, tobacco, textile and wood products accounted for about 7.5% of our GDP, while trading activities accounted for 15.5% with many of what is traded being agriculture-based.” The minister noted that when all these endowments and activities are further expanded and formalised, greater prosperity for everyone would be guaranteed.

We implore the federal government to go beyond rhetoric in its much-touted programme on the diversification of the nation’s economy, which has been over-reliant on crude oil in the last five decades. The over-dependence on crude oil, to the detriment of other abundant mineral resources and endowments like agriculture, have not only stifled the economy but also rendered it prone to incessant recession. This anomalous cannot be allowed to continue.

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