The crisis-induced alterations in the pricing of crude oil in the global market have always placed Nigeria and other oil producing countries on the edge of economic uncertainties, prompting economists to advocate for the diversification of nations’ economies that are solely reliant on oil. Current efforts at developing the Nigerian non-oil sector did not start today; it came about after what is globally referred to as the oil crisis of the 1970s.
This crisis was caused by two events that rocked the Middle East. The Yom-Kippur War of 1973 between Israel and its Arab neighbours and the Iranian Revolution of 1979 which disrupted global supplies of crude oil. These two events created economic difficulties for countries with heavy reliance on energy exports for their economic prosperity.
Responding to the oil crisis
In response to the consequences caused by the nation’s economy plunging into a crippling and frightening bottom of uncertainty, in 1976, the Nigerian government established the Nigerian Export Promotion Council (NEPC) to drive the nation’s dream of diversifying its economic potentials beyond the oil sector. With an energy not demonstrated before, the Council became the anvil upon which the wheel of advancing the growth of the non-oil revolved as one of Nigeria’s growing foreign exchange earners.
For the first time since 1973, the Nigerian government in 2021 earned more in non-oil revenues than what it generated from oil exports. By this feat, the country’s economy became reflective of the determination to be weaned from oil revenues that have sustained the Nigerian economy for over four decades. Though the country earned N1.6 trillion in revenues from the non-oil sector, such amounts proved incapable of footing the N12.56 trillion budgeted by the Nigerian government. The bulk of income from non-oil sources totaled 62.5% in the 11 months of 2021, thus brightening the prospects of the non-oil sector in turning the tables against oil revenues.
Apart from declining prices of crude oil in the international market due to the COVID-19 pandemic, with its concomitant disruptions in oil supply and demand curves, the earning of N970 billion as oil revenues for 2021 resuscitated the hope that non-oil revenue sources could become the survival platform for the nation’s economy. The bright performance demonstrated by the nation’s non-oil sector gives a glimmer of hope as a report by the National Bureau of Statistics (NBS) notes: “Nigeria’s third quarter 2022 Gross Domestic Product (GDP) figures which showed that the non-oil sector dominated economic performance by contributing 94.34 per cent to the nation’s GDP, while the oil sector contributed 5.66 per cent in the preceding quarter is something to cheer about…”
The Chief Executive Officer of the NEPC, Dr Ezra Yakusak affirms the mileage attained in advancing the growth of non-oil export revenues in the country when he disclosed in January 2023 that revenues accruing to the nation from non-oil sources had risen to $4.8 billion in 2022. In his words: “It is encouraging to note that despite the harsh economic environment precipitated by the effect of COVID-19 and the global economic recession, the sector recorded a significant and highly impressive result with a non-oil export earnings of US$ 4.820 billion recorded for the year under review. This represents an increase of 39.91% over 2021”.
Bright chances amidst scary challenges
There’s no doubt that there are many challenges confronting the non-oil sector, with past administrations deploying various measures to tackle the problems. In a period where scarcity of foreign exchange has become a major challenge, intervening measures as introduced by the Central Bank of Nigeria (CBN) have often provided succour in mitigating some of the difficulties.
For non-oil revenues to grow steadily in a nation that has heavily relied on crude oil, the need to develop the manufacturing sector remains indispensable. No nation develops on just exporting its raw materials without growing its manufacturing sector in order to increase its global competitiveness and provide jobs for the teeming population of its youths roaming the streets.
In a bid to tackle challenges plaguing the non-oil sector, the CBN this year launched its race to $200 billion in foreign exchange repatriation, popularly called the RT200 FX Initiative, with the target of raising $200 billion in foreign exchange earnings from the sector over the next three to five years. The initiative is founded on the anvil of encouraging value-adding export facilities, expansion of non-oil commodity facilities and a non-oil FX rebate scheme, among others, aimed at incentivising private sectors in the non-oil value chain.
Can non-oil revenues be higher?
Of course, Nigeria has long discovered that reliance on oil exports does damage to its economy. Not only has Nigeria’s incapacity to rise above being merely an exporter of raw materials dwarfed efforts at making the country competitive in the global market, lack of synergies for inter-agency collaborations has cobwebbed efforts in fashioning policies in creating a harmonious working relationship towards pursuing increased productivity in the non-oil sector.
More than our capacity in developing the manufacturing sector to add value for our raw materials products; Nigeria must increase the awareness of its youths to become Africa’s export champions through various programmes and mentorship in ensuring Nigeria’s diversification dream. In line with this objective, the Yakusak-led Council is presently engaged in supporting youths to actualise their export development programmes through organising football talent hunt.
The success stories of the beneficiaries of the Export Competency Development Programme of the Centre for the Promotion of Imports from Developing Countries (CBI), in partnership with the Council, has tremendously led to reduction of Technical Barriers to Trade (TBT) and increased the contribution of volume and value of export of goods and services.
In order to foster export competitiveness, the agency in charge of promoting non-oil exports now partners with the Centre for the Promotion of Imports from Developing Countries (CBI) in the ginger sector and other products, under NEPC-CBI ginger sustainability programme (2021-2025) for the production of high quality ginger, with more value and a diversified market through improved quality, certification, organic production and refined processing.
Advancing the frontiers of Small and Medium Enterprises (SMEs), no fewer than 11 SMEs/companies and five (5) Business Support Organisations (BSOs) have participated in a series of workshops and programmes aimed at building the capacity and developing the Sectoral Export Marketing Plan (SEMP), including organising Market Orientation Mission to Europe in Barcelona Spain from March – April, 2023. Over 30 MSMEs organised seminars have been convened in 29 states across all the geo-political zones of the country and FCT, with a total number of 660,000 MSMEs benefiting through direct participation in exhibitions, plenary sessions, among others, in those states, and the FCT. Far greater than the above strides is the awareness through various programmes by the NEPC to promote global certification for Nigerian products that were hitherto uncertified..
There’s no doubt that enthroning non-oil revenues as Nigeria’s leading foreign exchange earner are still fraught with daunting curves, but the highpoints attained in this tortuous journey remain a watershed in the diversification of the economy. If the past year is anything to go by, Nigeria’s non-oil sector has the prospects of outperforming the oil sector.
