Many governments have paid lip service to diversification, but this is the time to develop a very strong policy on diversification. We must follow the example of the United Arab Emirates which diversified its economy by reducing dependence on oil receipts from 100 per cent to only 35 per cent by going into service and smart industries. Some of the sectors to diversify our economy are:
Agriculture
Agriculture is one of the largest contributors to Nigeria’s GDP and has the potential to create massive numbers of new jobs, especially in Northern Nigeria which has very fertile agricultural land. But our policy on agriculture must move away from subsistence to mechanised agriculture. The Central Bank of Nigeria’s Anchor Borrowers programme that made Nigeria self-sufficient in rice production has shown the potential of agriculture.
Transportation
This is a massive sector that can create millions of jobs and billions in revenue. But the starting point is to have a cohesive multi-model transportation policy to take care of the four critical sectors of air, sea, road, and rail. Once there is an effective transportation policy, it will impact each of the four sectors in the following ways:
Aviation/Space
Aviation is a major transportation sector. Unfortunately, Nigeria has no presence in the international Aviation business. Nigeria Airways has long been comatose. Foreign aircraft dominate the Nigerian airspace and earn well over N2 trillion annually to our exclusion. Two trillion Naira is substantial in our national budget. A Fly Nigeria Act will ensure that public funds to purchase air tickets must originate and fly on a Nigerian carrier. The Fly Nigeria Act will create an instant market of goods, passengers and services for our national carrier. Jobs will be created and revenue generated to the advantage of the economy.
Space technology is huge. The late English theoretical physicist and cosmologist, Stephen Hawking referred to space as the future of mankind. Regrettably, Nigeria is not harnessing this sector. Space has many major applications for developing our economy. We will mention two examples. First, space can be applied to the energy sector as remote sensing establishes the quantum of our hydrocarbons. Second is the link between space and national security. Satellite technology intelligence gives us vital footprints in the national security infrastructure. The growing threat of terrorism and the adverse impact on economic stability can be checked by intelligence provided by space satellites. Nigeria has no space legislation. This hurts economic transformation.
Railway and Road Transport
The opportunities for rail and road are unimaginable. They connect people and open markets so goods and services are exchanged. The government is investing heavily in this sector but a lot more investment is required. Rail and roads need a lot more investment because its revenue and job potentials are huge.
Maritime
This sector has been completely ignored but it has the capacity to generate over N7trillion annually and four million jobs over five years. All that is required is the implementation of local content and Cabotage rules especially relating to the oil and gas sector which is currently dominated by foreigners. Our Cabotage legal regime must be enforced to stem capital flight and boost capacity for Nigerian Ship owners. Several critical bills relating to the maritime sector pending before the National Assembly require immediate enactment and implementation.
There is also an urgent need to review the Nigerian Shipping Policy Act of 1987. The enactment of a law on maritime zones is also long overdue. The Maritime Zones bill will extend Nigeria’s EEZ of 200 nautical miles by another 150 miles. This will create massive new revenue streams and generate jobs in the maritime sector.
Hydrocarbons and Solid Minerals
Although oil receipts are down, our huge gas reserves present opportunities for alternative revenue sources. Russia’s revenue from gas exports in 2017 was $ 38.1 Billion. The success of Nigeria’s LNG has demonstrated that gas revenue is massive but only if exploited. Nigeria can also derive revenue from petrochemicals like methanol which Nigeria currently imports. But the legal framework must be right.
The legal framework relating to hydrocarbons is skewed in favour of foreign companies in the entire value chain. In at least four cases, banking, insurance, shipping, legal service, and capital flight is massive.
In relation to shipping alone, it has been suggested that Nigeria loses over $10 billion annually. Revenue loss will continue unless the legal framework is amended to domesticate the value chain in hydrocarbons.
It is important to review the legal framework for local content with a view to strengthening implementation and enforcement. It is also very important to address the issue of corruption in the extractive industry.
The solid mineral is another sector that has not been adequately harnessed. Nigeria is estimated to have about 34 solid minerals, with every Nigerian state boasting at least one of these minerals. These can generate $ 10 Billion and five million Jobs. The Democratic Republic of Congo in 2017 alone saw the sector generate $ 1.68 billion, accounting for 55.16% of the total government revenue and 17.40% of the GDP. Solid minerals are undoubtedly capable of making a more pronounced impact on the country’s employment rate and generating more revenue for the government however, to derive the highest possible benefit from this sector, a proper policy and legal framework needs to be put in place.
Access to capital
Capital is the oxygen and lifeblood of the economy. One of the areas where we can tap into capital is the Housing/property market. Eighty per cent of Nigeria’s businesses rely on land and housing as collateral. Unfortunately, the slow administration of the Land Use Act in terms of consents and permits has meant that the banks have not accepted untitled property as collateral. This has caused incalculable damage to businesses in need of capital.
Information Technology
Nigeria can leverage its status as a multi-billion-dollar tech hub to develop its IT sector and become a global IT services destination. Github, a leading software development platform, recently reported that Nigeria is home to the fastest-growing developer community on their platform.
The country has benefited from companies like Andela which brought world-class training and job opportunities to budding Nigerian programmers. Gebeya is promoting a similar model of training the next generation of African developers.
Nigeria’s growing supply of programmers will likely be met with rising demand from the country’s constantly expanding tech hubs. The potential of the business-to-business (B2B) or enterprise software sector is also good news for the country’s ITC sector.
African companies are expected to spend $3.6 trillion on B2B services in 2025. Nigeria is well-positioned to be part of this growth given the coexistence of traditional industries and B2B tech startups.
The combination of a growing local talent pool and a bustling B2B sector means that the IT sector can drive economic growth for decades to come.
Entertainment
Nigeria’s entertainment industry already plays an important role in the Nigerian economy but its full potential remains untapped. The industry was projected to generate $1 billion in export revenues this year and bring in crucial foreign currency.
The industry has an added benefit over the natural resource sectors since entertainment products are non-rival goods.
This means that the local consumption of a movie or a song, for example, does not prevent the export of that same song to international markets. This allows Nigerian entertainment products like songs, movies, and books to generate wealth indefinitely.
The entertainment industry drives job growth and employs millions of Nigerians in complex value chains. Nollywood, Nigeria’s film industry, produces an average of forty films a week and directly employs 300,000 Nigerians.
Nigeria’s upcoming fashion industry is perhaps the best example of old value chains meeting new ones: designers are using local cotton to create garments being modelled at international fashion weeks. The fashion industry directly employs and benefits farmers, distributors, designers, and more.
Trade policy
Nigeria has no trade policy which is why it is a major dumping ground for foreign goods. We spend billions of dollars importing basic food commodities that can grow locally. We must grow what we eat. We need to reverse this with a robust trade policy.
Trade policy refers to the rules and regulations on imports, exports, tariffs, duties etc. Trade policy rests on a tripod of critical factors – import substitution, tariffs, border enforcement and compliance. We need to enact trade remedies legislation and a trade Expansion Act.
These will impose anti-dumping duties on non-essential products.
There are also special duties and measures we can impose on exports into Nigeria which are subsidized by a foreign country. The trade remedies legislation will prohibit imports if it is adjudged that they will cause material injury to local industries, for example by impeding local growth.
It is also important to enact legislation that will support the recently established Nigerian Office for trade negotiation (NOTN). It is crucial that the office is elevated to the ministerial level.
We need to establish a National Customs and Border Enforcement Services. This Border Enforcement Services will need new legislation to merge immigration and customs services.
The Border Enforcement Service will replicate the US Customs and Border Enforcement Agency. The merged service will reduce duplication and proliferation of agencies at the borders.
To comply with ECOWAS protocol and the African Continental Free Trade Agreement (AfCFTA), the border closure policy should be replaced by a border enforcement policy. A strong trade policy will help create millions of jobs, grow local industries and expand the economy.
•Dr Agbakoba, a former Nigerian Bar Association (NBA) President and Senior Partner at Olisa Agbakoba Legal (OAL), is a pioneer in Space Law and Regulation in Nigeria.