Traction not seen after years of mouthing diversification

After several years of shadow boxing, the situation on ground in Africa’s largest economy shows that  very little has been done in real terms to diversify the economy from oil, create jobs and save for a rainy day.

Despite sinking over $5 billion in the Ajaokuta Steel Complex Limited, it is yet to be completed. The dilapidated nature of the complex explains why many local manufacturers import most of their raw materials.

Experts say a functional Ajaokuta Complex can provide over 60 percent of manufacturing inputs of several sub-sectors and prevent the rush for foreign exchange with which to import factory inputs. This will have a multiplier effect, as it will conserve foreign reserves, strengthen the naira, create jobs and reduce dependence of critical industries on external markets.

“An iron and steel complex is essential in kick-starting the industrial process in the country,” said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN) in an industrial memorandum made available to BusinessDay.

Not much activity is taking place at Delta Steel &Mines, also known as Aladja Steel, which was recently taken over by Premium Steel & Mines, owned by Sunil Vaswani.

Nigeria is currently losing N180 billion from non-performance of the Nigeria Paper Mill (NPM)Limited located in Jebba, Kwara State;  Nigerian Newsprint Manufacturing Company (NNMC)Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State, according to Hussain Doko Ibrahim, director-general, Raw Materials Research and Development Council (RMRDC).

Currently, Africa’s largest economy imports over 90 percent of its paper needs, thereby exporting jobs to India, China and other paper manufacturing countries.

“The co-investor that bought the Nigeria Paper Mill (NPM) Limited did not buy it to help Nigeria,” said Samson Ololade Ogundele, ex-senior manager, Nigeria Paper Mill Limited, Jebba, Kwara State, in a workshop in Lagos.

The absence of petrochemical industry in Nigeria informs why pharmaceutical and plastic companies import almost all of their raw materials. It is also the reason for Nigeria’s unending dependence on other economies for petrol refining.

Apart from poor infrastructure in the agric sector, Nigeria ranks 132 out of the 188 countries worldwide measured by FAO / United Nations, in terms of the number of tractors in the country. The country has fewer tractors than Serbia & Montenegro, (with 400,000), Pakistan (320,000) and Uzbekistan with (170,000).

According to Richard Hargrave, managing director, Dizengoff West Africa Nigeria Limited,  the country has only one tractor for every 4,100 farmers, an issue that makes agric mechanisation a pipe dream.

“It is about time we face up to the facts if we as a nation are serious about producing the food we eat ourselves,” Hargrave said.

“The fact is that Nigeria has only one tractor for every 4,100 farmers is ridiculous. Each tractor is farming 1,013 hectares of arable land. We simply are yet to have anything like enough tractors necessary to work our fertile arable lands, and so truly produce enough food we need to survive,” he added.

The solid minerals still contribute less than one percent to GDP and the country is yet to derive revenue from the sector, despite the availability of about 44 minerals.

“We have issues with technology and data. There is also no funding scheme for small-scale miners,” said Shehu Sani, president, Miners Association of Nigeria (MAN) in an interview with BusinessDay.

While agriculture, solid minerals, and manufacturing readily come to mind, some stakeholders are urging government to develop tourism infrastructure across Nigeria to enable the country gain from a growing global GDP contribution and employment potential of tourism.

Going by the figures, tourism contributed US$7.6 trillion (10 percent of global GDP) and 277 million jobs (1 in 11 jobs) for the global economy in 2014, a number expected to grow by 3.5 percent this year, according to World Travel & Tourism Council’s (WTTC) Travel & Tourism Economic Impact 2015 report.

Tourism contributes about nine percent to South Africa’s gross domestic product (GDP), half a trillion rand,  and is expected to create an extra 225, 000 jobs by 2020.

Despite the insecurity in Egypt, tourism contributed EGP117.2 billion (5.9 percent of total GDP) in 2014, and is forecast to rise by 3.2 percent in 2015. It contributed 4.8 percent of  Kenya’s GDP, and sadly, about 1.6 percent of  Nigeria’s GDP, due to the neglect of the sector over the years.

“One of the advantages of tourism as an export earner is that it is less volatile than the commodity sector,” said Abraham Adigun, a consultant destination manager.

According to Adigun, government needs to repeal laws that discourage private sector and foreign direct investments in the sector, tackle issues of multiple taxation, truly provide a friendly environment and ensure safety of investments here.

Adigun suggested that in the long term, financial institutions should be encouraged to take more risks, while public private partnerships need to be broadened with enabling laws and assurance on safety of investments to woo global investors.

Jimi Alade, a tour operator, noted that with a population of over 150 million people, Nigeria can boost its revenue source from receipts accruing to it from domestic tourism.

Before that happens, he said that the state of infrastructure across the country, especially roads, needs to be improved upon. Efforts at developing tourism clusters across the country should be revived and taken seriously, while the private sector should be encouraged to truly drive the industry as obtains in economies that rely on tourism for revenue.

OBINNA EMELIKE & ODINAKA ANUDU