Diversification: The desideratum and shortfalls

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Since global oil prices began to suffer  from the latter end of 2015, the impacts on the Nigerian economy (which almost has all its eggs in one basket) have seen conditions of its profile enmeshed in the mire of colossal downturn. The circumstances of the global oil market which at critical times have occasioned crashing of oil prices below $US30 per barrel, have seen Nigeria’s economy sliding into recession. From 2016, the narratives of the economy with the exposure of the weaknesses of the impacts of its mono-cultural profile have been ridden with the unsavoury wobbles which appeared to have wrecked the fabrics of growth indices. The slide into recession had made it dawn on the Government why diversifying the economy from its dependence on oil as the mainstay of its export base has become non-negotiable. The recent crash of oil prices below $US20 at the wake of the COVID-19 pandemic lockdown in 2020, ocassioning another slide into recession, had further reminded the Government again of the signifinance of diversification of the Country’s economy.

However, while the Government at the harshness of downturn from crashes in  global oil prices has been known to express the readiness to turn to other non-oil sectors to boost the Country’s export profile by diversification, it is apparent that the objectives and targets set by the Government at the wake of its awareness on the need to broaden the scope of the Country’s export bases have fallen short of the desideratum.

At the heightening of the wobbling economy in the precipitating slide into recession, the Zero Oil Plan, a core component of the Federal Government’s Economic Recovery and Growth Plan, was conceived by the Nigerian Promotion Council in the fourth quarter (Q4) of 2016. According to the Federal Government, the objective of the medium and long term strategy aimed at diversifying the economy from oil, was to increase the contribution of non-oil exports to the Country’s Gross Domestic Product by 20 per cent. In the NEPC 2016 annual report, it was stated that the objectives of the plan was to generate at least a minimum of 40 – 50 per cent of Nigeria’s earnings from non-oil export. The report had stated explicitly that the plan was expected to grow non-oil foreign exchange to $30billion by 2020.

The report had read partly: “The Nigerian Export Promotion Council launched the Zero Oil Plan, a medium and long term strategy aimed at diversifying the economy from oil. Zero Oil Plan has become a key component of the Economic Recovery and Growth Plan. The focus is to generate at least a minimum of 40 – 50 per cent of Nigeria earnings from non-oil export. The plan was presented to different states, development partners and donor agencies and has been widely accepted.The overall targets set for the zero oil plan include: to grow non-oil foreign exchange from $2.7bn base to $30bn by 2020.”

However, it is apparent that the records between the period of conception of the plan and the present, reflect huge deficit between the targets and the results.  Statistical records from the National Bureau of Statistics (NBS) have shown that between the end of 2017 (December) and 2020 (December), Nigeria generated a total sum of N6.5trillion from non-oil exports, which reflects an irreconcilable difference of about N5.8trn lower than its N12.3trn ($30bn) target set under the Zero Oil medium and long term Plan.

The records for non-oil exports during the period under review showed that in 2017, non-oil exports contributed N629.9bn or 4.6 per cent of the total export of N13.6trn, while in 2018, only N1.9trn was generated from non-oil exports out of the total export of N18.5trn. In 2019, non-oil exports accounted for N2.5trn out of a total export of N19.2trn recorded at the end of the year; while in 2020, N1.4trn was generated from non-oil exports, from the N12.5trn total export. With the statistics, it is inarguable that the mono-cultural feature of the Nigerian economy still remain much pronounced as oil still remains its mainstay.

It is apparent that gaps which are left unaddressed by systemic errors have made the objectives of the plan more of an ideal than an accomplished target. The huge gap between the targets and the results appear too far irreconcilable, that the aim towards diversification bends largely to mere intention not supported by concerted efforts to outwit the circumstances posing barriers to the desideratum of having a robust export profile resting on diversified interlocking of virile sectors. The desideratum should be having a profile characterised by each sector individually making  reliable contributions to export, such that no strain borne by market circumstances from one sector would be so debilitating to ravage the economy out of balance, as accruals from other functional sectors would be much potent to cushion any of such possibilities.

The need for the Government to be strategically lively towards driving the diversification course with deliberate concert of efforts to outwit any circumstance that may, at any time, pose strains against the course, remain sacrosanct. It is observable that among the major 11 export products listed in the Zero Oil Plan to form the bases of diversifying the export profile of the economy, palm oil, cocoa, soybeans, and rubber with high financial value to replace oil, hold bearings to the agriculture sector. It is lamentable however, that the sector recently has been bewildered with manageable circumstances which having been handled with levity, have thrown the sector into shambles. The ravages of insecurity which have engulfed the sector recently, have seen several farmers who have been left at the mercy of marauding herdsmen displaced and their settlements deserted. It is apparent that with the prevailing conditions, having a robust export base on agriculture would only be a facade when acute food crisis is presently frowning domestically at the Country.

The importance of working around systems of coordinated patterns to achieve the diversification course of the Country’s economy cannot be underestimated at any level of rationality. It is evident that the disposition and approach of the Government to the course have rather not left the point of conception and intention towards actualisation – hence, the evident irreconcilable gap between the desideratum and the prevailing output. It is pertinent for the Government to rise to the challenge of diversifying the economy with the approach of seeing same as the only thrust of salvaging the economy. The inconsistencies in the Government’s disposition and approach, reflect that it has not yet come to see the course as a quest upon which the resuscitation of the economy lies. The shifting forth-and-back disposition, with the vagaries of oil prices, which has seen the Government growing cold on diversification when oil prices redound, while awakening from slumber with crash approach when same dwindles with the vagaries of global oil market, will not produce the desired results. To this extent, such inconsistencies are counterproductive to the concerted patterns driven by strategic approach which achieving the desideratum of diversification of the Country’s export bases demands towards reviving the Country’s economy to an equilibrium of robust stability.