Agriculture:
Agriculture accounts for approximately 25% of GDP, employing about 30% of the workforce. Facts sourced from the NBS, Central Bank of Nigeria (CBN), Federal Ministry of Agriculture and Rural Development (FMARD), International Fund for Agricultural Development (IFAD) and Food and Agriculture Organization (FAO) indicate that agriculture grossed about N14.3 trillion (approximately $37 billion) in 2020 with a growth rate of about 2.2% and absorbing about 30% of the labour force in the country. The agro-economy in Nigeria is expressed through production of major crops as cassava, yams, maize, rice, cocoa, and sugarcane which account for about 14.5% of GDP and livestock production, primarily cattle, sheep, goats, poultry, and pigs, accounting for 4.5% of GDP. Agriculture is also impacted by forestry through which Nigeria produces such things as timber, wood products, and non-timber forest products which together constitute only 2% of GDP. Fresh water and marine fisheries including input supply, extension services and marketing together contribute 2% of the GDP.
While government driven policies such as fostering private sector investments in commercial farming, processing and value chain development, well-designed research and development in crop and animal production improvements, enhanced irrigation irrigation and water management methods to boost dry season farming, along with, access to finance and global markets are critical to developing the sector, there are major challenges some of which are peculiar to Nigeria. These include climate change and weather volatility, violent conflicts and insecurity that have severely undermined food production in many parts of the country, poor infrastructure such as roads that hinder the movements of produce, inadequate storage and processing facilities, among many others.
It is therefore imperative that while Nigeria looks at global trends in agro-economy development and seeks ways to realign its objectives so as to take advantage of such global developments, it should seriously consider increasing investments in irrigation and water management and also push for the development of the agricultural value chains especially as it affects processing and manufacturing. Above all, we must do all we can to enhance farmers access to finance and markets, especially by taking advantage of the opportunities created for regional, continental and international trade through the emergent African Continental Free Trade Area (AfCFTA) and other regional frameworks like those of ECOWAS.
Oil and Gas:
For several decades, as we all know, Oil and Gas has overwhelmingly been the driving force of Nigeria’s economy accounting for almost 90% of our export earnings, 70% of government revenue and 40% of the GDP.
Data from such bodies like the Nigerian National Petroleum Corporation Limited (NNPCL), the Department of Petroleum Resources (DPR), the Central Bank of Nigeria (CBN), International Energy Agency (IEA) and Organization of Petroleum Exporting Countries (OPEC), put Nigeria’s daily oil and gas production at about 1.4 million barrels and 8.4 billion cubic feet gas production. Same data also indicate that Nigeria has about 37.2 billion barrels and 199.3 trillion cubic feet in oil and gas reserves respectively. Available statistics indicate that upstream activities including exploration and production account for about 60% of oil and gas revenue while midstream activities (majorly processing and transportation) and the downstream (refining and marketing) account for 20% each. Undoubtedly, the Nigerian economy is heavily dependent on oil and gas. The sector is not only a major source of government revenue but also provides employment for a sizeable segment of the population attracting foreign investment that stimulate economic activities across diverse sectors, among others.
However, as we have seen over and over again, our country’s near total dependence on oil and gas revenue is fraught with danger top among which is the volatility of the global oil market which is very susceptible to all kinds of political tensions such as the ongoing Russia-Ukraine War or the unfolding conflict between Israel and Lebanon and by extension Iran.
All too often, our national budget benchmarks have been ruined by the volatility of global oil prices leaving the government scrambling for new figures; a situation that make a mess of any effort at economic planning. Add to this the widespread theft of crude oil (bunkering) either by petty criminals involving the vandalism of pipelines or by a sophisticated cabal as has been widely reported in both the local and foreign press. Despite the corruption that bedevil the sector, it is the environmental impact of the fossil fuel industry that we should be most worried about given the primary sustainability concern of today’s lecture.
Nonetheless, these concerns are opportunities for Nigeria to diversify its economy and in doing so position itself for a new post-fossil, renewable energy age. Of course, the transition to a renewable energy economy must be gradual and very thoroughly planned in order not to weaken an already fragile economy and create more hardships for our long-suffering people.
A robust implementation of the provisions of the recently enacted Petroleum Industry Act (PIA) is a good starting point to this transition as it enables us as a country to reap the most benefits of a long-abused industry that is gradually coming to the end of its economic relevance. However, what concerns me most is that while the biggest fossil fuel polluters like China, India and the United States are investing heavily in renewables to take control of the energies of tomorrow, in Nigeria, we are actively prospecting and celebrating the discoveries of new oil fields and bickering how to share the revenue of an industry that experts agree will barely be relevant in the next 25 years, at the most. The time to act is now as it will not only transform our economy but also save creation from climate change.
Manufacturing:
Manufacturing significantly contributes to Nigeria’s economic growth. Data from the Nigerian Bureau of Statistics (NBS), the Central Bank of Nigeria (CBN), the Ministry of Industry, Trade and Investment, Manufacturers Association of Nigeria (MAN) indicate that the manufacturing sector contributed about N5.3 trillion (approximately $14 billion USD) to the GDP in 2020 with a growth rate of 3.4% and about N1.4 trillion (approximately $3.7 billion) in exports. The sector also accounts for about 1.7 million jobs which have helped to stimulate economic growth through revenue generation from taxes and exports as well as attracting foreign investments. The manufacturing sector which cut across textiles and apparel, food processing and packaging, pharmaceuticals and healthcare products, automotive and assembly plants, electronics and electrical products, chemicals and petrochemicals, among others, however has been impacted negatively by policy summersaults leading to as many as 8 major multinational corporations leaving the country since May 2023, many of them after several decades of operation. The sector is also severely affected by infrastructure deficits especially in power and transportation, poor exchange rate of the Naira, inadequate funding and financing, limited access to raw materials, regulatory and bureaucratic hurdles as well as competition from imported goods.
Analysts’ projections are that the diversification of the economy to achieve reduced dependence on oil, development of non-oil sectors like textiles and food processing, increased local production and export of manufactured goods as well as enhanced trade competitiveness will rejuvenate the manufacturing sector, spur economic growth and address the forex crisis by reducing pressure on the Naira.
Check this story for Part 3
Sustainable business practices in emerging economies (3)