Nigeria will need to prioritize five sectors based on their linkages with economic growth to deliver significant improvement in economic outcomes, a report by the Nigeria Economy Summit Group (NESG) has shown.
According to the report, despite the economy growing at an average of 3.2 percent in the first three quarters of 2021, it is still plagued by high inflation, rising unemployment and underemployment rate as well as rising poverty.
This implies that growth has been concentrated in a few sectors which do not have the capacity to create jobs with decent incomes while the critical sectors are struggling to grow.
The growth rate of these critical sectors has declined relative to the pre-2016 recession period of strong economic growth in 2014.
According to data from the National Bureau of Statistics (NBS) and NESG research, sectors such as agriculture, manufacturing, education recorded a growth of 4.6 percent, 15.1 percent and 7.7 percent respectively in the first three quarters of 2014.
However, in the first three quarters of 2021, the agriculture, manufacturing, and education sectors have seen their growth decline to 1.6 percent, 3.7 percent, and -1.4 percent respectively.
Inflation hit 15.6 percent in December 2021, according to the NBS while unemployment was projected to hit 40 percent, by the Presidential Economic Advisory Council (PEAC).
The federal government has pledged to lift 35 million people out of poverty by creating 21 million full-time jobs by 2025 but this would be impossible except it can drive improved productivity across these major sectors of the economy.
“Resolving socio-economic issues including low job creation, unemployment, foreign exchange instability, external trade deficit and government revenue constraints, and insecurity rest on the ability of the different sectors of the economy to expand and contribute positively across board.
As much as Nigeria needs to scale up and expand production across all sectors of the economy, the government needs to prioritize sectors based on their linkages with economic growth, other sectors of the economy, employment and social inclusion,” the report stated.
NESG highlighted five sectors and the reforms needed to drive their growth
Agriculture
The agriculture sector is one of the sectors highlighted by NESG as critical to development in Nigeria. However, the sector has been plagued by low productivity and high wastage of produce which impedes output and drives rising food insecurity in the country.
The report also noted that a large proportion of the farmers are small-holders in nature, undertaking subsistence farming, and are based in the rural sector. These farmers would benefit from access to information leading to increased crop yield.
NESG recommended that there is a need to extend training schemes to farmers in the use and maintenance of technology which can lower post-harvest losses and improve productivity.
“There is also a need to develop appropriate pricing for agricultural products to keep farmers’ income stable,” they noted.
Manufacturing sector
According to the report, the manufacturing sector has continuously faced several structural challenges leading to low productivity which has caused manufacturing shutting down, limiting growth and investment inflow into the sector.
One of the recommendations by NESG stated that there is a need to provide adequate incentives such as affordable credit facilities to manufacturers to facilitate mass production of exportable commodities.
Also, the report suggested developing a home-grown quality control system to ensure Nigerian-made products become attractive to foreign buyers as this will help boost forex earnings and non-oil export commodities.
Education sector
This sector’s poor performance has contributed to the scale of unemployment and underemployment in the country.
According to the United Nations Children’s Fund (UNICEF), at least 10.5 million children are out of school in Nigeria, the highest rate in the world.
The education sector received just 5.7 percent of the 2021 budget of N13.5 trillion.
“The low budgetary allocation, a lack of industry-aligned curricula, a mismatch between employer needs and labour force skills are major challenges facing the sector.
NESG recommended that there is a need for a school curriculum reform, introduction of an unemployment insurance scheme and partnering with the private sector to solve some of these challenges.
Health sector
Although Nigeria has seen improvement in health outcomes recently, it is still poorly ranked at 163rd out of 191 countries in the World Health Organization health ranking in 2021, explaining why it has one of the poorest health outcomes globally.
According to UNICEF, about 20 percent of the children in Nigeria do not live till their fifth birthday due to the lack of basic facilities. Nigerians also have one of the lowest life expectancy rates in the world at 54.81 years.
The World Health Organization (WHO) has recommended 1 doctor per 600 people in every country but at 1 doctor per 5000 people, Nigeria has one of the lowest doctor-patient ratios in the world.
NESG also recommends that reforms should center around developing incentives for the banking sector to provide financial support for the health sector and also improving the working conditions of health professionals to avert brain drain.
According to the British General Medical Council, Nigeria saw 805 medical doctors migrate to the United Kingdom between July and December 2021.
Trade sector
According to NESG, the trade sector is the second largest employer of labour in Nigeria with a high absorptive capacity which means it is critical to job creation.
“Given its distributive and market-creating roles in the economy, the deficient performance of the trade sector will affect Nigeria’s competitiveness among other African countries in the face of the Africa Continental Free Trade Area (AFCFTA) agreement,” the report noted.
The report stated that there is a need to address the porous nature of the land borders and poor capturing of trade across land borders.
There is also a need to increase access to trade financing and ensure a more friendly interest environment, the report stated.
