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CBN: Nigeria needs urgent economic diversification to spur growth

Dr Ozoemena Nnaji, the director of the trade and exchange department of the Central Bank of Nigeria (CBN, says the country needs urgent diversification of the economy to spur growth.

By TechnocratMedia

Dr Ozoemena Nnaji, the director of the trade and exchange department of the Central Bank of Nigeria (CBN, says the country needs urgent diversification of the economy to spur growth.

Nnaji made the call at the 33rd seminar for finance correspondents and business editors in Abuja.

According to NAN, she said Nigeria’s mono-product economy had been detrimental to its economic growth.

According to her, a mono-product economy is one that depends on a single product or resource for economic growth and development.

She said that the concept could further be referred to as a case where a country depended on a single product for sales or exports for 70 per cent of its budget funding.

“A mono-product economy is unstable,” she said.

“An increase or decrease in the world price of the product will affect the budget of the economy.

“It may witness a high percentage of unemployment; it is import-dependent and cannot stand on its own.

“It weakens the foreign exchange base of the country’s economy,” she said.

She said that such an economy weakened the local production of goods that were imported into the country.

“In addition to importing finished goods, a country may also import inflation and other economic effects,” she said.

She said that oil and gas accounted for 90 per cent of export income and 85 per cent of government revenue in the first quarter of 2022.

According to her, that makes Nigeria a mono-product economy, owing to its dependence on oil and gas.

She added that a more committed engagement in agriculture would grow the economy faster.

“Nigeria is a hugely agrarian economy which vast arable land, and with a large portion of the population into subsistence agriculture.

“Only less than 40 per cent of the vast arable land is cultivated, ” she said.

Nnaji said that the overbearing impact of the oil sector on the nation’s economy exposed the country to external shocks whenever there is a change in price.

“To insulate the Nigerian economy from the shocks and FX shortages, there is a need to develop new strategies.

“It should be aimed at earning more stable and sustainable inflows of FX through diversification of the non-oil export sector, ” she said.

She added that diversification would guarantee sectoral dependence and balance in the economy.

The CBN director also harps on the need for more sources of export products to reduce the importation of goods and services that can be produced locally making diversification imperative.

“Promotion of international trade that will lead to balance of payment position; the need for a dynamic economy capable of absorbing shocks while maintaining full employment.

“The need for a high rate of economic growth and development, ” she said.

In 2021, Nigeria’s economy grew by 3.6% in 2021 from a 1.8% contraction in 2020, underpinned on the supply side by 4.4% expansion in the non-oil sector against 8.3% contraction in the oil sector; non-oil growth was driven by agriculture (2.1%) and services (5.6%), according to the African Development Bank.

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