By Chinora Ugwu
There are indications that the Nigerian economy is on the path of recovery. Oil prices have stabilised around $55 per barrel. Government’s peace overtures in the Niger Delta have helped to raise oil production from the nadir of 2016. In the last quarter of the year, the GDP contracted by 1.3 percent, an improvement over the2.24 percent in Q3 and 2.06 percent in Q2.
Moreover, various forecasts, including that of the World Bank, agree that the country will experience a positive output growth in 2017.
But the growth projections are largely underwhelming, ranging from a half percent to 1 percent. This explains why the Federal Government continues to work hard at the economic recovery plan. From 2017, one anticipates that the economic trend will take a sharp upward turn.
The corporates and the generality of Nigerians will savour such lease of positivity, and it will validate the current administration whose good intentions and programmes have been thwarted by a sharp fall in revenue as a result of the plunge in oil prices.
The expected recovery will, at best, take the country back to that place of opportunity of the past years before 2015, when we could have built a healthy foreign reserves level and financed non-oil export diversification. In the last two to three years, we have experienced the pains of external shocks to oil revenue.
The pains are attributable to lack of significant foreign reserves cover. But, fundamentally, the concentration on oil receipts to provide 70 percent of government total revenue, or 90 percent of its foreign exchange earnings, made the oil price crash much harder to bear.
It is time for more determined actions on the diversification of the economy, and diversification of foreign exchange earnings through increased non-oil exports. Raising non-oil exports revenue is a key area government’s interventions are needed. Analysts agree that the economy is broadly diversified, given that oil accounts for just about 15 percent of the country’s output. Agriculture, services – including finance, ICT, entertainment, hospitality – and their extensive value chains are major contributors to the GDP. Additional potentials are locked in the solid minerals sectors.
The Nigerian Export – Import Bank is statutorily mandated to facilitate the country’s non-oil export growth. NEXIM Bank has a range of tools, including credit financing in both local and foreign currencies, risk-bearing services in the form of export credit guarantee and export credit insurance facilities, special funds, loans for foreign inputs, export advice, and market information, to support the non-oil export sectors.