A central theme of Nigeria’s economic reform programme is diversification of the economy to reduce dependence on the oil and gas sector, but also to stimulate a broader economic base that creates a high number and variety of employment opportunities. Mustafa Bello, executive secretary of the Nigerian Investment Promotion Council (NIPC), says that a lot of work has gone into developing a clear investment policy with respect to five priority sectors in addition to the oil and gas sector. They include agriculture, solid minerals, manufacturing, information communication technology (ICT) and tourism.
Agricultural wealth
Despite the dominant role of the petroleum sector as the major foreign exchange earner, agriculture remains the mainstay of Nigeria’s economy. In addition to contributing the largest share of GDP, it is the largest non-oil export earner, the largest employer of labour, and a key contributor to wealth creation and poverty alleviation.
Over the years, the rate of growth in agricultural production has stagnated and failed to keep pace with the needs of a rapidly growing population, resulting in a progressive increase in import bills for food and industrial raw materials. The government’s policy thrust is to provide the right policy environment and target incentives for private investment in the sector. Its objective is a minimum annual growth rate of 6% in the sector, raising agricultural exports to $3bn by 2007 and drastically reducing food imports, from 14.5% of total imports to 5% by 2007.
Emphasis will be placed on the cultivation and processing of cassava, rice, vegetable oil, sugar, livestock, tree crops and cereals.
Natural resources
Nigeria has abundant solid mineral deposits with some independent estimates indicating that they could provide more revenue, foreign exchange and employment than the oil and gas sector. However, several factors constrain development.
In this sector, the government’s policy goals are to provide incentives and an enabling environment for private sector investment. Vigorous support will be provided for the exploration of base metals and precious and semi-precious stones. Informal sector mining activities will be formalised and supported to encourage sustainable production and create self-employment.
Small industries
Although the manufacturing sector (including small and medium-sized enterprises – SMEs) has the potential to create wealth and employment, it has stagnated in Nigeria, and its contributions to GDP and employment remain small. The activity mix in the sector is limited, dominated by import-dependent processes and factors.
The overriding objective of industrial policy is to accelerate the pace of industrial development by radically increasing the value-add at every stage of the value chain. The government will emphasise increases in total factor productivity by pursuing knowledge and skill-intensive production on the basis of best practices. It is targeting annual growth in the sector of 7% and increasing capacity utilisation to about 70% by 2007. Most importantly, it will encourage the private sector’s share of investment in manufacturing to rise to 70% by 2007.
To achieve this, the government plans to remove infrastructure constraints on SMEs, and expedite the establishment of clusters and industrial parks. It plans to strengthen the Bank of Industry and other special-purpose finance institutions, such as the Nigerian Export Import Bank and the Nigerian Agricultural, Rural and Co-operative Bank.
Services grow
There has been a boom in the service sector in recent years. Liberalisation led to a substantial increase in the volume of activities in the banking and other financial services industries. The recent liberalisation of the communications industry led to huge increases in telephone service per capita and created many new job opportunities.
To grow a vibrant ICT sector, the government has committed to developing modern information and communication technology to support the private sector while providing targeted incentives to encourage the development of viable ideas in this sector.
Nigeria’s tourism industry has great potential for attracting foreign investment, which would generate employment and foreign exchange. The government’s primary focus is to make Nigeria the preferred tourist destination in West Africa. The immediate target is to increase tourist arrivals into the country by 10% a year.
In addition to encouraging private sector investment, the government recognises the need to improve security and grow awareness of what Nigeria has to offer.
Another sector with potential is the Nigerian film industry, which has a significant foreign exchange-earning capacity. Recent reports indicate that about 2000 Nigerian videos were rented or sold in a single month in a single outlet in the US. The potential market for Nigerian films is large.
