MOVING AWAY FROM OIL ECONOMY – THISDAYLIVE

Government should be serious about diversifying the economy

The prevailing economic downturn has eroded the ability of Nigerians to such an extent that the basic necessities of life, including food and health care, are becoming luxuries. The available data portrays the dire situation of millions of inactive youth on the roadside and financially inactive. The combination of continued negative economic growth and an uncontrolled demographic boom has put the country in a very difficult and potentially explosive situation. Unfortunately, the government’s response to these challenges has been inconsistent. Despite all the noise about the diversification of the economy from oil to agriculture, there is nothing on the ground to suggest seriousness.

Last month at the eighth edition of the EU-Nigeria Business Forum, the Ambassador of the European Union to Nigeria and the Economic Community of West African States (ECOWAS), Ms Samuela Isopi, spoke on the current challenge. “The Nigerian economy grew by 3.1 percent in the first quarter of 2022 and was driven by the non-oil sector. However, the economic situation remains difficult,” Isopi acknowledged. “Countries that are still struggling to recover from the COVID-19 pandemic now face further challenges due to the Russian-Ukraine war. The shocks are already being felt in Nigeria on fuel, fertilizer and food prices. She said Nigeria’s new economy should focus on finding a way out of difficult terrain, identifying opportunities and adopting a sustainable business approach.

Unfortunately, even in these moments, there is no real commitment to the much talked about agriculture sector, which still contributes a great deal to the country’s Gross Domestic Product (GDP). We are particularly concerned that Nigeria continues to neglect cash crops such as cocoa, oil palm and groundnut, which have been a mainstay of the country’s economy for years. In the early 1960s, Nigeria’s palm oil production accounted for 43 percent of world production, but now accounts for less than seven percent of global production, with the majority of production coming from scattered small holders. Meanwhile, Malaysia, which received its first oil-palm seed from Nigeria, is the world’s second largest producer.

The case of cocoa is regrettable as Nigeria was previously among the five largest producers of cocoa before the neglect. Nigeria’s coca production, which was around 400,000 tonnes per year in the 1970s, is now very low. It is supported by the National Cocoa Development Committee (NCDC) to rehabilitate old firms, supply heavily subsidized agro-chemicals, start new plantations or replant older ones with high-yielding trees, and promote local consumption of cocoa-based. Despite the best efforts of Products to boost prices.

In addition, the famous peanut pyramid, which marked the peanut boom in the 1970s, began to disappear with the discovery of oil. The establishment of the African Groundnut Council under the auspices of the African Union to promote the production, consumption and export of groundnut oil in six countries in Africa, including Nigeria, has also not helped matters. Like palm oil, groundnut is still produced today mostly by smallholders. Worse, the largely subsistence agriculture sector has not kept up with rapid population growth, and Nigeria, once a major net exporter of food, now imports most of its food products. Even with all the arable land, Nigeria is now a nation that cannot feed its people.

As a result of this neglect, the economy is heavily dependent on the oil sector, which provides less than 25 percent of GDP while accounting for more than 90 percent of foreign exchange earnings and about 65 percent of government revenue. , Oil has also created a culture of fast wealth through government patronage and corruption. Therefore, we urge the government to show greater seriousness in diversifying the economy from oil to other sectors that would be able to employ millions of our youth.