Policy Imperatives for a Non-Oil Export-Driven Economy for Nigeria

It is no longer news that Nigeria’s economy has relied heavily on crude oil revenues for decades, making it susceptible to global price fluctuations. It has also become crystal clear that Nigeria can no longer continue to depend on this commodity as major foreign exchange earner. To achieve sustainable economic growth and prosperity, Nigeria must urgently transition to a non-oil export-driven economy. This transition requires immediate action in the form of policy reforms, strategic initiatives, and targeted investments across different sectors.

In my last article, I had illustrated the high potential for Nigeria to trade its way to economic recovery, prosperity and growth. In this writeup, we shall highlight some key policy imperatives to achieve this goal:

1. Policy Coherence and Alignment

Developing a National Export Plan is a pivotal step in guiding Nigeria’s transition to a sustainable, non-oil export-driven economy. This plan, must be a clear and comprehensive articulation of a long-term vision that places priority on the manufacturing sector, so as to stem the current preponderance of exporting Nigeria’s agricultural commodities in their raw form (thereby exporting jobs and reducing industrialisation). Such a plan will not only attract investors but also guide policy decisions and coordinate efforts across stakeholders.

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In recent years, we have heard severe lip service paid to acronyms like OLOP (One-Local-Government-One-Product), and OSOP (One-State-One-Product). A well-articulated National Strategy on Non-oil Exports will accelerate the attainment of this objective while fostering a culture of export-oriented production.

– Ensure Policy Coherence: Ensure policy coherence and alignment between national economic goals and the specific needs of the available economic sectors. This includes promoting non-oil exports and a swift transition away from overreliance on crude oil. Existing policies may need to be reviewed and revised to be consistent with the goals of export diversification. At the inception of the Structural Adjustment Programme in 1986, the then military Government promulgated the Export Incentives and Miscellaneous Decree (No 46) now an Act of Parliament. Less than half of the support instruments provided in that document have been activated. It is certainly time for the present administration, especially the supervising ministry (Ministry of Industry, Trade and Investment) to revisit and comprehensively review this and other policy instruments aimed at supporting economic diversification through non-oil exports.

2. Improve the Business Environment

Addressing Macroeconomic Instability is a crucial aspect of creating a stable and conducive business environment. A stable macroeconomic environment, characterized by low inflation, a predictable exchange rate, and sound fiscal policies, is essential for attracting investment.

-Tackle Bottlenecks and Bureaucracy: The government should prioritize addressing key constraints to business operations, such as bureaucratic hurdles, lengthy permit processes, multiple taxation, and access to land.

Streamlining regulations, implementing a one-stop shop for business registration, and ensuring transparent land administration can enhance the ease of doing business and attract investors. Nigeria seems to have recognised the need to implement and sustain reforms that improve business efficiency, simplify regulatory procedures, and establish transparent systems, by setting up the Presidential Enabling Business Environment Council, PEBEC. Under the spirited leadership of the now Minister of Industry Trade and Investment, Dr. Jumoke Oduwole, PEBEC succeeded in addressing a lot of the bottlenecks suffocating Nigeria’s business environment, including non-oil exports. The investing public is eagerly expectant that the Minister is now even better placed to implement some of those policies.

– Address Infrastructure Deficits: Inadequate infrastructure, especially in transportation, power, and logistics, significantly increases the cost of doing business in Nigeria. Improving roads, rail networks, and port facilities and ensuring reliable power supply are crucial to making Nigerian exports competitive in the global market. Indeed, most Nigerian manufacturers are of the opinion that if government could just solve the problem of power, manufacturing cost would reduce by as much as 40%!

– Establish Export Clusters: Clustering exporters along product segments can significantly address the current problems of quality (leading to the recurrent rejection of Nigerian products abroad). It will also speedily guarantee higher volumes and a stringer ability to meet huge market demands. These initiatives can attract foreign investment, promote value addition, and create specialised manufacturing hubs for export-oriented industries.

3. Invest in Human Capital Development
– Focus on Relevant Skills Development: Investing in education, skills development, and vocational training is crucial for equipping the workforce with the necessary skills for productive jobs in a diversified economy. The focus should be on developing skills tailored to the demands of the global market in sectors like agro-processing, mineral processing, IT/digital, and other emerging sectors. The Ministry of Industry, Trade and Investment should work closely with the Ministry of Communications and Digital Economy on this.

– Promote Entrepreneurship and Export-Related Skills: Supporting entrepreneurial ventures and providing training on export procedures, quality standards, and market access can empower local businesses to engage in export activities. This includes equipping individuals and businesses with the knowledge and skills to meet international market requirements. Market-readiness remains a significant issue for Nigerian MSMEs seeking to internationalise.

4. Leverage Existing Strengths and Resources
– Promote Value Addition in Agriculture: Nigeria’s agricultural sector has immense potential. Strategic initiatives are needed to enhance value addition and improve market access for agricultural commodities. This involves supporting the processing and manufacturing of agricultural products, like turning raw plantain into various finished food products. It is time Nigeria started to emphasize farm-gate processing to reduce the exportation of its agricultural commodities in their raw form.

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– Develop the Solid Minerals Sector: Nigeria’s untapped potential for solid minerals presents a significant opportunity. Facilitating investment in mining and mineral processing can help Nigeria tap into the lucrative global market. This requires addressing challenges in the sector, including illegal mining, inadequate infrastructure, and limited access to finance. Nigeria has, arguably, remained a significant under-achiever when it comes to appropriating the huge potential of its mineral deposits. While it is trite to commend the efforts of the Ministry of Solid Minerals Development, there is still a lot of ground to be covered if the country wants to be ranked amongst the world’s top mineral exporting nations.

– Promote Services Exports: Services exports represent a largely untapped opportunity. Formalising service exports within the economic framework and developing capabilities in sectors like IT, finance, legal services, and entertainment can bolster export earnings.

Olufemi Boyede, CITP
International Consultant & Member, BoT,
Network of Practising Non-oil Exporters of Nigeria (NPNEN)

….To be continued