Foremost industrialist and Africa’s richest man, Aliko Dangote, yesterday declared that the very ‘existence’ of Nigeria depends on the rapid diversification of the economy.
“Since oil prices are unlikely to rebound any time soon, it would not be an exaggeration to assert that the very “existence” of our country is now hinged on the rapid diversification of our economy, especially in the manufacturing, agriculture and mining sectors,” he said.
This was as President Muhammadu Buhari explained that the manufacturing sector was well positioned to be a major driver of Nigeria’s economic growth because of the nation’s immense natural resources and the entrepreneurial spirit of Nigerians. Buhari and Dangote spoke yesterday at the 44th Annual General Meeting of the Manufacturers Association of Nigeria (MAN), which held in Abuja.
The theme of the meeting is “diversifying the Nigerian Economy: the Role of Government in Manufacturing.” The President of Dangote Group stated that in the face of economic recession confronting Nigeria, it has now become very evident for the country to urgently develop other income streams by diversifying its economy since it can no longer depend solely on crude oil exports to fund its economy.
Insisting that diversification is key to the growth and development of the economy, Dangote said: “Diversification is no longer an option, it has now become the only hope.”
Diversifying the Nigerian economy can sometimes be misconstrued to mean neglecting the oil and gas sector. On the contrary, the oil and gas sector needs to be deepened and expanded to enable us unlock the full benefits in the hydrocarbon value chain.
“Even though diversification of the economy has to be private sector driven, government has a huge role to play in creating a conducive climate for businesses to thrive. One of the biggest challenges in Nigeria today is the deteriorating macroeconomic environment.
Government needs to quickly restore confidence in the economy by beefing up its external reserves while making concerted efforts to improve the overall business climate. Investors always look out for stability of the local currency amongst other factors in making decisions on whether or not to risk their investment in any economy.
Needless to say, to effectively diversify the economy, the private sector would require foreign exchange to make the necessary investments in new sectors.
“To demonstrate seriousness and sincerity in its declared drive to revive the agricultural sector, government should come out with a comprehensive package of incentives and reliefs that addresses the issues of high entry cost, absence of low interest funding, long gestation periods, access to land, availability and cost of imported inputs and absence of guaranteed commodity prices,” he said.
Dangote, who was the guest speaker, also lamented the decline in the contribution of the manufacturing sector to the country’s economy.
He told the gathering that recent figures indicate that the manufacturing sector contracted by -2.9 percent in 2015 as against growth rates of 21.8 percent and 14.7 percent in 2013 and 2014 respectively. “The aggregate manufacturing job created in 2014 and 2015 was 20,535 jobs as against 53,340 jobs created in the sector in 2013 alone.
These figures merely confirm what we already knew which is that the manufacturing sector in Nigeria is currently under very serious strain,” Dangote stated. He urged the Federal Government to expand the tax base rather than increasing the tax rate as currently being advised. His words: “The crux of our problem is, therefore, the depth and quality of diversification. To be impactful, diversification in Nigeria has to occur across several fronts.
There is export diversification, which involves creating multiple streams of foreign exchange income by exporting a variety of value added products as well as services.
“Next is fiscal diversification to shore up the contribution of non-oil revenue to total government revenue by increasing tax receipts. The emphasis should, however, be on expanding the tax base rather than increasing the tax rate.”
Speaking at the event, Buhari assured that his government was putting in place machinery that would encourage high patronage of made in Nigeria products.
“We are working on improving the patronage of locally made goods, bridging the gap between skills required by industry and those provided by our educational institutions and access to finance for our Small and Medium-Scale Enterprises (SMEs).”
“We recognise that MAN and the other Organised Private Sector (OPS) groups are our key stakeholders in this journey and we will continue our engagement with you,” the president noted.
Buhari explained that his government’s strategic plan to boost manufacturing activities in the country is supported by the Nigeria Industrial Revolution Plan (NIRP) and the National Enterprises Development Programme (NEDEP).
“Government is, therefore, focused on implementing necessary policies and strategies aimed at unleashing the full potential of manufacturing in Nigeria.”
“A strong manufacturing sector will create more jobs and wealth for our people. It will usher in sustainable economic prosperity because we will produce what we consume as a nation and generate foreign exchange by exporting any surplus,” he said. He further assured that government would partner the association in the task of charting a brighter future for our nation.
