State Of The Nigerian Economy

Nigeria is the most populous country in West Africa with an
estimated population of about 137,253,133 million people that b elong to more
than 250 ethnic groups. Nigeria came into being in October 1, 1960, when she
declared her Independence from the British rule.

As the country marks her 52nd Independence Anniversary
today, it becomes necessary to x-ray the state of her economy in order to determine
her growth and development rate.

The economy of a country speaks volumes about the well being
of such a country. In the case of Nigeria at 52, we will look at the state of
her economy in relation to her investment profile, jobs creation efforts, the fate
of the manufacturing sector and the quality of her local content.

Nigerian Investment, Promotion Council (NIPC) has worked
tirelessly to raise the investment profile of the country to make it attractive
for the foreigners seeking to partner with Nigeria in one business or the
other.

At the 12th meeting of the Honourary International Investors
Council (HIIC) at the Presidential Villa on Thursday July 5th 2012, President
Goodluck Jonathan commended the council for its unrelenting efforts to raise
Nigeria’s investment profile and also make the country a preferred investment
destination.

The President is quoted as saying “We are steadily building
up our Excess Crude Account and our Foreign Reserves. We are also on the verge
of launching the Sovereign  Wealth
Fund.”  He also  made the council know that the government’s
transformation agenda is about turning Nigeria’s huge potential into
developmental realities.

Nigeria, however, operates a market economy that is
dominated by crude oil exports with the revenue earnings accounting for about
90 per cent of foreign exchange and 65 per cent of budgetary revenues. Nigeria
ranks the 12th largest producer of petroleum in the world and the 8th largest
exporter and founding members of OPEC.

The country also export cocoa, palm oil, groundnuts, cotton,
timber and rubber, though there are opportunities for the exploitation and
export of natural gas, limestone, coal, tin, gold, silver, lead-zinc, glass
sand, iron-ore among others.

Nigeria according to statistics, offer a large market in
sub-Saharan Africa with a population of about 120 million people, with a market
potential that also stretches into the growing West African Sub-region.

The government has also created a favourable climate for
business and industrial venture. Administrative and bureaucratic procedures
have been greatly streamlined as policies and programmes that guarantee a free
market economy has been put in place.

Tremendous investment opportunities also exists in other
natural resources like agricultural sector products which include groundnuts,
coconut, citrus fruits, maize, millet, cassava, yams and even leather and
textile.

In the midst of this robust investment opportunities in the
country, one of the greatest challenges of the nation at 52 has been the problem
of unemployment. This problem has resulted to anti-social vices, ranging from
militancy, Boko Haram, prostitution, armed robbery among other societal ills.

Successive administrations always have the agenda of
eradication of unemployment in the society, but the problem has persisted till
now.

The leadership of President Jonathan thought it wise to
fight against the menace through encouragement and involvement of the private
sector which he alleged will have multiplier effect on the economy.

“The present administration is committed to creating jobs
for Nigerians. And jobs can be created through direct employment by government
and her parastatals and agencies, but we believe that a more sustainable
approach to job creation, is encouraging the private sector. “And to do that,
we need to build young entrepreneurs who will be able to employ five or more
people and that multiplier effect will give us more job opportunities than even
government expanding the parastatals that will make them less productive. That is
one of the cardinal points of youths enterprise with innovative in Nigeria
(YouWin), “ President Jonathan said in one of the YouWin inaugurations.

Under the phase, 1,200 women (entrepreneurs) would receive
between N1m and N10m over the next 12 to 18 months.

Federal Government also has kick-started the provision of
370,000 jobs across Nigeria through Federal Government Community Service Scheme
held in Yola.

The Minister of Finance and Coordinating Minister of the
Economy, Mrs Ngozi Okonjo-Iweala said the project is under the Subsidy
Reinvestment and Empowerment Programme (SURE-P). Each state is expected to have
10,000 job with each participant getting N10,000 monthly.

The President has also appealed to International development
partners and private sector to support his government’s effort to create jobs
for the youths.

Job opportunities also exist in the  oil and gas sector using the local content
policy. Government has passed a local content law which says that Nigerian
indigenously formed oil company must have nothing  less than 40 per cent stake in the oil
industry so as to enable citizens to have access to their money.

Experts think that the operation of cartel in the oil
industry is affecting the job opportunities that abound in this sector, hence,
the need for whatever efforts made by stakeholders in the quest to reduce or
eliminate unemployment in the country to be backed by government through the
enforcement of the constitutional instrument of the Local Content Policy Act.

The problem is that vacancies and related openings that
exist annually at the various levels and in different capacities in the oil
companies that are meant for Nigerians are not given to them as a result of
lack of specialised certification and prerequisite training.

The Managing Director of Backlang  Technical Development Company, Dr. Chudi
Egbunike, who was a former executive member of the American Welding Society
said the implication is that the deficiencies in knowledge, training, exposure
and certification will now expose foreigners to the jobs, especially those from
India, China, Philipines and Lebanon.

He said that the way out is to create massive employment
opportunities for Nigerians and open up the sector for more of the Local
Content Act to be effective, especially in the area of getting more employment
openings for Nigerians by exposing them to specialise trainings and
certification.

The quality of Nigeria Local Content also affected by
pricing policy, bidding practices and cost factors, where NAPIMS directive to
the operating partners said all contracts should be awarded to the lowest
bidder’s price.

This encourages non-professionals to under-cut prices in
order to win a contract that cannot be executed at the bidded prices which
causes Nigeria to end up paying more for their wells for a rework.

Petroleum Technology of Nigeria (PETAN) suggest that the
only way forward to successfully implement the Local Content Policy is to build
local capacity where stakeholder must review the current bidding pricing and
award strategies.

Meanwhile, the country and its leadership has been trying to
also exploit the non oil sector in order to avoid the country’s over dependence
on the oil sector and to expand the economic base of the nation. Government has
also pursued economic reforms marked by the privatisation and deregulation
which seek to transfer state ownership of institutions to the private sector,
so as to engender efficiency in the productive sector.

At 52 Nigerian manufacturing sector has not made any
impressive mark or contribution to the Gross Domestic Product (GDP). As at 2011
the manufacturing sector’s contribution to GDP according to The National Bureau
of Statistics is less than 5 per cent, 4.1 per cent in 2010.

The efforts of past and present administrations to boost the
sector through various policies has not yielded the desired results.

The inability to effectively control the allocation of
import licenses and foreign exchange to have also largely aggravated the pace
of industrial decline.

Manufacturing sector has refused to respond to critical
structural transformation necessary for it to play a leading role in economic
growth and development.

Bureau Statistics pegged the issues affecting the sector to
inadequate infrastructure, shortage of skilled manpower, poor linkage of
industrial sub-sectors, over dependence on the external sector for raw
materials and capital goods which were discovered in 1970s.

In 2012, most of these problems still persist like
infrastructural decay, lack of steady power supply, insecurity and economic
instability.

The fate of the sector thereby lie in the solution to the
challenges facing the sector, especially inadequate infrastructure and power
supply. There is also the need for consistent and persistent efforts to be made
by government to check the importation of goods that can be produced locally.

If the words of the President is anything to go by, the
manufacturing sector need to poise for competitive production at competitive
prices.

President Jonathan said “We are vigorously pursuing the
implementation of our road map on power sector reforms.

“We must, therefore, begin to upgrade our production
technologies to save energy and produce quality goods at very competitive
prices in tune with modern global practices.”