Economic experts uphold diversification as key to mitigate economic challenges

Economic experts say that the key to mitigating the impact of the current economic challenges in Nigeria is to diversify the economy with special focus on agriculture, construction, manufacturing and mining.

This they believe will result to a massive contribution of exports to the Gross Domestic Product (GDP), increase revenue base for taxes, create employment opportunities and bring about protection from external shocks.

Speaking at the Nigerian Economic Outlook 2016 at the Redeemed Church of God, The King’s Court, Lagos, Kunle Elebute, partner, KPMG Advisory Services, said with diversification, wide manufacturing export base would positively drive economic growth through contribution to GDP.

According to him, “if the country diversifies, there will be an increase in revenue base, which could be robust from contributions in the form of taxes as well as the contribution of more sectors to economic activities, leading to creation of more employment opportunities.”

Citing example of how South Korea achieved diversification, Elebute explained that they promoted import substitution, implemented import restrictions policies, provided direct credit to the private sector and enhanced political and economic relations by creating and substituting a system of close ties between government and businesses.

He advised that for Nigeria to achieve diversification, “the country has to implement sector strategies that focuses on key elements of comparative advantage, create industrial parks in each geographical zone to attract local and global manufactures and create linkages to educational system that produces core skills for diversified sectors.

“There should be infrastructures for efficient supply chain, availability of gas and transmission lines, downstream and transport sector deregulation and availability of health care facilities.”

Bayo Rotimi, managing director, Quest Advisory Services, during his session on the implication of 2016 budget to Micro Small Medium Enterprises (MSMEs), said “the 2016 budget comes with a paradigm shift with its proposed record breaking N1.8 trillion infrastructural spend, which aims to spur MSME growth.”

Te current administration also seeks to set up $25 billion infrastructure development fund, with major emphasis on diversifying the economy, which is a good development to MSMEs, Rotimi said.

Other implications of the budget to MSMEs, Rotimi mentioned, are vocational training for youths, increased source of funding, education, welfare, agriculture and solid minerals.

He said threats to MSMEs in Nigeria remained access to finance, inconsistent government policies, increased tax enforcement and potential devaluation of the naira, among others.

Ben Akabueze, pastor, Redeemed Christian Church of God, The King’s Court, during his address to participants, said “he believes it is possible to prosper by doing business righteously,” adding that children of God must reflect the light of God in the marketplace.