Unfortunately, our country for decades has primarily exported one product, crude oil, which really is a perishing asset. It is for this reason that the government prioritizes Nigeria’s economic diversification. In line with this, a new agenda – the Zero Oil plan – has been put together to envision a Nigerian economy without oil. What else could we export? Who would buy? How much could we make? These are the questions answered under this roadmap to change this age-old dependence on one single export commodity. Yet as noble as the idea is, it would take hard work for the objective to be realised. Still, it can be done.
As His
Excellency, President Muhammadu Buhari
(GCFR) said to a delegation of manufacturers in 2015, “…Nigeria must begin
to behave as if we have no more oil”. These are the words which shape our Zero
Oil economic agenda, and are essential to build a strong Nigerian economy for
the future. For years Nigeria has imported thousands of goods worth over US$50
billion a year, which we pay for mainly with crude oil proceeds of over US$70
billion each year. Our fears have now materialized, in the past 2 years crude
oil prices have fallen 60% and Nigeria’s earnings have likewise fallen by at
least US$35 billion, inevitably leaving a financial hole in the economy. The
pressing question now is how to fill this funding gap – and the answer is
simple: Nigeria must find new things (not oil) to export quickly, in large
commercial scale. If Nigeria broadens and grows its export basket, a positive
chain reaction ricochets throughout the economy. The logic follows – when you
grow exports, national output (agriculture, industry, solid minerals) will also
grow; local businesses will grow; supporting infrastructure will expand; and
jobs and investments will definitely follow. The overall macro impacts result
in growing foreign reserves (from export forex) and a more resilient economy.
We are not the only nation in history to have ever faced this challenge. When India, the 2nd largest country in the world faced similar hardships under its founding father, Jawaharlal Nehru, his clarion call was simple, “India must Export or Perish”. Nehru’s mantra changed the thrust of his country’s economic policy and today India exports over US$300 billion of non-oil goods each year. More importantly, India made sure that no single product, not even oil (if they had it) would hold the people to ransom. Other countries have similarly done well in exports, for instance Brazil does over US$200 billion of non-oil exports and Malaysia over US$250 billion.
In the case
of Nigeria’s story however, there is cause to pause. Despite our population of
170 million people, and being the 7th most populous country in the world, we
make only US$5 billion in non-oil exports. To put this in perspective, if Nigeria
did not have crude oil, our exports will account for one-third of the total
exports of Trinidad and Tobago… a country that is 1% of Nigeria’s population,
and far less endowed. This is a cause for worry.
We are not
starry-eyed optimists, as moving to a Nigeria with Zero Oil will not be easy.
But we should remember that we once had a country that was Zero Oil. The
questions to ask are: What happened to our proud history in Palm Oil, Cocoa,
Ground Nuts, Cotton? We were the toast of the world, where are these products
now? We know in good days Nigeria typically makes over US$70 billion annually
from crude oil exports, but the world is bigger than oil.
Only 3 of
the top 20 exporters in the World depend heavily on oil exports, and today
even those 3 are fast diversifying. Indonesia makes over US$18 billion from
only Palm Oil exports (we understand the Indonesians took their first Palm seed
from Nigeria over 50 years ago); Brazil makes US$17 billion from Soybeans;
Saudi Arabia makes over US$30 billion from Petrochemicals, and Bangladesh
makes US$5 billion from T-shirts.
Let’s also
look at the Chinese economic miracle – simply an export miracle. In 1980, both
China and Nigeria each accounted for 1% of global world exports, so in a sense
“then we were equals”. However by 2011 China accounted for 11% of global
exports (all non-oil), while Nigeria was less than 0.4% and shrinking. China
has grown richer and its currency, the Yuan, is even considered an alternative
reserve currency. Like the Chinese the only way to strengthen the Naira is to
increase productivity, increase capacity, and focus on export orientation.
The Nigerian Export Promotion Council (NEPC)
anchors the Zero Oil agenda. A few targets to note on Nigeria’s proposed
journey to Zero Oil. First, we set a long-term goal of earning over US$100
billion from non-oil exports (i.e. 20% of today’s GDP). When compared with
Export to GDP ratios of other emerging market countries, this is reasonable –
China’s is 24%, Brazil 12%, South Africa 31%, and Malaysia 76%. Nigeria’s long
term goal is however further broken down into two midterm targets – which is
to grow non-oil exports from US$5 billion today, to US$18 billion by 2019, and
US$30 billion in non-oil exports by 2025. Growing non-oil exports 6 fold in 9
years will be a feat indeed, but then again these are extraordinary times, and
we need extraordinary economic action.
In
implementing the plan, hundreds of thousands of new jobs will be created every
year from numerous initiatives. The sort of scale needed to take it seriously.
The Zero Oil plan identifies 21 priority countries as markets for Nigerian
products (termed “Export 21”) and 11 strategic export products with high
financial value to replace oil, these include Petrochemicals, Palm Oil, Cocoa,
Soybeans, Rubber, to name a few. To achieve this Nigeria must scale up domestic
production to levels unprecedented, and create competitive channels to move
cargo and get goods into foreign markets. The plan envisages increases in
total non-oil export volumes in Nigeria which should grow by 70 million tons,
clearly a logistical challenge that would require upgrades on major transport
corridors to get goods from Nigeria’s hinterlands in every single State of the
Federation, to ports in Lagos, Port Harcourt, and Calabar.
The plan
facilitates export aggregators to source products from millions of micro,
small, and medium-sized enterprises, which ensures our grass roots, youths, and
households also feel the economic impact of exports. The 36 States and FCT are
also expected to play a leadership role by selecting at least one priority
export product under the One-State-One product programme.
Plainly put,
with the Zero Oil plan, Nigeria will be a very different place in the next 5
years. We are a resourceful people, this is the time to dig deep and create an
economy to work for us today, as well as last for generations to come. Taking a
cue from Roberto Azevedo (Director General, World Trade Organisation) “…
Nigeria’s economic growth has to happen independent of oil exports”.
As everyone
talks about the crash in crude oil prices, From Saudi Arabia to Venezuela, and
from Russia to the United States; for Nigeria we seek to go beyond oil. One of
Nigeria’s responses is to restructure and drive our economy through non-oil
exports. Many emerging market countries have walked this road successfully and
thrived. The Zero Oil plan sets our country on this path as well. Now we need
the conviction to execute, and the courage to stay the course. Time to Export,
Export, and Export! (Sun)
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