To achieve these however, there must be deliberate policy directive and investments in critical infrastructure as transportation networks including road, air and sea. There will also be need to improve on energy supply and distribution as well as pricing. Further, enhancing telecommunications infrastructure will open the economy for more employment opportunities as new jobs would be created by investments in the manufacturing and related sectors which can also stimulate entrepreneurships and small-scale industries through skill and manpower development.
As with other sectors, the future of Nigeria’s manufacturing sector, largely depends on enacting and implementing pro-growth manufacturing policies. Such agencies like the National Industrial Revolution Plan (NIRP), the Nigerian Industrial Policy (NIP), Manufacturing Enterprise Promotion Program (MEPP), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and Nigerian Export Promotion Council (NEPC) should help drive the process by aligning Nigeria to global economic trends and enable her take advantage of opportunities created by regional frameworks like AfCFTA and the ECOWAS market. This effort should be boosted by the availability, accessibility and affordability of raw materials and government support incentives to enable the private sector invest in manufacturing infrastructure around supply chains and logistics, research and development, along with international partnerships on entrepreneurship and innovation.
Services:
The Services Sector is broad and encompasses financial services (i.e. banking, insurance, pensions, telecommunications, information technology (IT), tourism and hospitality; transportation (i.e. aviation, maritime, road, rail); professional Services (i.e. law, accounting, consulting, education, healthcare, real estate and e-commerce). According to NBS, Nigeria’s services sector recorded a growth of 4.32% and contributed 58.04% to the aggregate GDP in Q1 2024.
The services sector contributes to economic growth through job creation and employing millions of Nigerians. It also enables foreign exchange earnings for the country through the attraction of foreign investments in the telecommunications, tourism, and IT sub-sectors as well as drives innovation thus improving productivity. It also helps to push up infrastructure development in the telecommunications, transportation, and real estate sub-sectors while driving economic growth through the increased demand for financial services, expansion of telecommunications infrastructure, growth of e-commerce, investment in education and healthcare and tourism infrastructure.
According to statistics from NBS, CBN, Ministry of Communications and Digital Economy, Nigerian Communications Commission (NCC) and the Nigerian Stock Exchange (NSE), the services sector GDP is about N53.6 trillion (approximately $140 billion) and this is a 2020 estimate. The sector’s growth rate is put at about 4.2% with telecommunications subscribers reaching 204 million and banking sector assets of N45.8 trillion (approximately $120 billion). Conversely, the e-commerce market size as of 2020 was put at about N1.4 trillion. However, the sector is negatively impacted by infrastructure challenges including power supply and pricing, poor road networks, congested ports, and inadequate air transport, slow and expensive internet services as well as inadequate and unreliable water supply.
Other challenges stifling the sector include complex and time-consuming regulatory processes, frequent changes in policies and regulations, unclear or ambiguous regulatory frameworks, widespread corruption in government agencies, high inflation rates, volatile exchange rates which had negatively impact imports and limited access to finance occasioned by high interest rates, insecurity and brain drain (the Japa Syndrome).
The Construction Sector:
The construction sector is yet another key pillar of the Nigerian economy. Its growth has a multiplier effect on the economy as it drives economic expansion through job creation and infrastructure development. Recent official figures indicate the sector accounts for about 3.5% of Nigeria’s GDP with growth rate of about 10.4%. It is estimated that the sector employs over 2 million Nigerians and contributes to government revenue through Value Added Tax (VAT), Company Income Tax (CIT), building permits, approvals and licenses. The sector is a major stimulant of the Nigerian economy especially in the area of such infrastructure like construction of rads/bridges, residential, commercial, and industrial developments. It also plays a key role in the development of infrastructure like power plants, transmission lines, and distribution platforms, water treatment plants, pipelines, and distribution networks. These account for developments in demands for materials like cement, steel, etc., and also, trade in real estate and housing. The construction sector also further stimulates the national economy by attracting direct foreign investment in the sector through joint ventures and partnerships.
However, funding constraints and inadequate access to credit, corruption and regulatory overkill, skills gap, among others rank high on the major challenges facing the sector.
Following this brief review of key sectors of the Nigerian economy, let me quickly caution about the somewhat cavalier approach to the rapid development of our extractive industries beyond fossil oil. Some have even described mining as the new oil for Nigeria. It may well be the case given the abundant reserves of various minerals within our shores, but extracting them carelessly without adequate assessment of environmental impacts is a recipe for disaster. As the World Wildlife Fund noted in a 2021 report, emerging economies like Brazil, Russia, and India have some of the highest rates of deforestation, which is primarily driven by the demand for resources. This is also true about Nigeria as it not only have negative impact on the environment but can also have adverse effects on the economy, through the loss of biodiversity, decreased agricultural productivity, and increased vulnerability to natural disasters. Of recent, residents of Mpape, Katampe and Maitama areas of Abuja have raised alarm over some form of earth tremor in the area. In response, the Director-General of Nigerian Geological Survey Agency (NGSA), Mr. Olusegun Ige, was quoted as confirming the tremor but assured they were low and non-threatening to lives. It might interest you to know that these areas are witnessing massive extractions and blasting of rock to give way for urbanization through real estate development and road construction. However, while these excavations may create room for economic progress, do they also necessarily ensure social progress? This question becomes imperative on the understanding that economic progress does not necessarily lead to social inclusion, especially in the light of the gentrification that the FCT Abuja and many Nigeria’s major cities have witnessed in the last few decades. It is for this reason that sustainable business practices have to ensure that economic progress is inclusive, and that the benefits of development are distributed equitably among different segments of the society so as not to increase the social disparity gap.
Realigning current economic realities in nigeria to sustainable business practices
Distinguished colleagues and special guests, I have spent time so far discussing the idea of emerging economies and sustainable business practices locating Nigeria in the matrix. Now to the main task of the lecture- Realigining current economic realities to sustainable business practices in Nigeria.
Check this story for Part 4
Sustainable business practices in emerging economies (4)