The non-oil sector, once a leading revenue earner for Nigeria, has suffered decades of neglect by successive administrations due to over-reliance on crude oil revenue and policy inconsistencies in the sector. However, it is refreshing that the government is striving to change the narrative. Just recently, the Federal Government signalled new commitment to boost revenue through the sector by calling for collaboration between the public and private sectors as a way to ramp up growth of the sector.
The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, who disclosed this at the recent 5th edition of the National Treasury workshop on Nigeria’s revenue challenges, said the government can no longer wait but to focus on the non-oil sector as a way to diversify the country’s revenue base. According to the minister, the urgency to tap into the abundant minerals in the non-oil sector has also been necessitated by global shifts in energy policies, declining oil demand and fluctuating crude oil prices in the international market.
This means that Nigeria can no longer be overly dependent on oil receipts as the main oil earner. Currently, the oil sector contributes over 70 per cent of government’s total revenue. The new impetus in the non-oil sector is a welcome development. It should be aggressively pursued with the right policy framework. It requires a pragmatic approach to harness the nation’s natural resources, which include agriculture, solid minerals, manufacturing, tourism, telecommunication and digital economy.
Despite the abundant natural and human resources, the sector has not been effectively exploited to drive sustainable economic growth and development. It makes the partnership between the public and private sectors, especially in the financial and economic landscape crucial to raise the country’s revenue base at this time that government is facing multiple challenges. These challenges have been made worse by poor infrastructure, high cost of doing business, bureaucratic bottlenecks, insecurity, regulatory inefficiencies, low tax compliance and widespread revenue leakages, all of which have hindered progress in the non-oil sector.
It appears that the move to make the non-oil sector viable and a better alternative to the oil sector is paying off. Latest figures from the National Bureau of Statistics (NBS) show that the sector’s contribution to national output grew to 95.4 per cent in the Q4 2024. This represented 3.84 per cent of Nigeria’s GDP in the Q4 2024. This is higher than the 3.2 per cent projection by the International Monetary Fund (IMF). The oil sector could only contribute 4.6 per cent during the same period.
The GDP released last week by NBS may not accurately reflect the current structure and size of the economy, particularly given the rapid change in sectors such as the technology and services subsector. In real terms, the non-oil sector has shown that it holds the key to Nigeria’s future in terms of revenue generation. For instance, in Q1 2023, it contributed 93.37 per cent to the GDP, 90.75 per cent in Q1 2022 and 94.81 per cent in the Q4 2021.
The agricultural sector contributed 25.59 per cent, while the service industry contribution stood at 17 per cent. Other non-oil exports that have shown much promise in revenue contribution are leather goods, rice, sesame seeds, dried cassava flour/garri, palm kernel oil, rubber, textiles and cocoa. In all of this, the role of the private sector in complementing government’s efforts should be deepened by creating the right policies and conductive environment that will attract local and foreign investors to the non-oil sector.
In addition, the government must curb the activities of illegal miners in some parts of the country. Without providing adequate security in the mining areas, it will be difficult to exploit our abundant solid minerals. Ensuring accountability and transparency in public finance management will build trust and attract investments in the sector. Beyond that, government should improve the exchange rate regime.
At the same time, we enjoin the government policymakers to fashion out good policies that will make Nigeria investors’ preferred destination in the non-oil sector in Africa. If well harnessed, the sector will generate the much-needed revenue and create jobs for many Nigerians. This has become necessary at a time of growing unemployment among the youths.