• Friday, July 12, 2024
businessday logo

BusinessDay

Rebasing exposes sectors ripe for potential growth explosion

businessday-icon

The GDP rebasing exercise undertaken by the NBS has exposed a number of sectors which are ready to contribute meaningfully to economic activity in the country if the right government policies can spur further investor interest in them.

Education

A lot of Nigerians are travelling out of the country to get quality education as a result of poor state of the education. Nigerians go to countries such as Ghana, United Arab Emirate (UAE), the United States and the United Kingdom in search of quality education.

If government can improve the environment and education infrastructure, this will reduce the number of people leaving the country for education elsewhere. The money used to travel outside AUGIEthe shores of the country could be recycled into the economy, helping to create more economic activity.

The rebased GDP figures for 2013 showed education contributing 1.60 percent to the country’s economy equivalent to N1.13 trillion of the total estimates of N80.22 trillion.

Insurance

The insurance sector has been an underperformer as products that can move or penetrate the economy have largely not been developed.

Nigeria’s insurance sector underperforms countries such as Kenya and South Africa which have wider and more market driving insurance products compared to Nigeria.

In addition, the Nigerian insurance regulator (NAICOM) has set a N1.1 trillion gross premium target by 2017 for all insurance companies in the country. Based on their nine-month through 2013 results the target seems a big mountain to climb.

Its current contribution to the country’s GDP based on 2013 rebased figures were N453.74 billion which is 0.56 percent of the total GDP figures.

Coal mining

This is one of the sectors needing revamping, the reason being that it has always been in a state of neglect for a period of time now.

South Africa is sub-Sahara Africa’s highest producer of coal although Nigeria can become a major coal exporter with its large coal deposits if the right policies are put in place.

Nigeria currently sits on an estimated two billion tons of coal in reserves with several unexplored areas.

The distribution of the reserves is such that, if developed, no part of the country will be left behind.Coal is considered to be the cheapest fuel and has provided an alternative for oil since the Middle East crisis. The oil market is often affected by the political climate and this has driven developed countries to seek alternatives and so far, coal is highly favored.

The rebased GDP figures for 2013 showed coal mining contributed N5.6 billion to the country’s economy out of the total estimates of N80.22 trillion.

Air transport

With a population of 170 million people, the country’s potential for air travel is anchored on its large population and huge land distances.

For the Nigerian aviation sector to grow and compete at the global arena, it has to remove the infrastructure bottlenecks hindering its growth potentials.

The government must privatise or concession the airports to encourage professionalism and quality service delivery.

In the meantime, government action has already begun to modernise and remodel the nation’s 22 airports.

The Ministry of Aviation has begun to construct wholly new air cargo facilities at designated airports around the country.

A new directorate of cargo development has been created in FAAN to fully exploit the rich potential Nigeria has in air cargo transport business, one area where Nigeria has been missing for several years.

The aviation sector contribution to the Nigeria’s new rebased GDP figures was N48.87 billion which represents 0.61 percent of the total 2013 GDP figure of N80.22 trillion.

Oil refining

Nigeria is the largest producer of crude oil in Africa and as such should be a refining hub.

The country’s large domestic market is an added advantage as it means there is already existing demand for refined petroleum products as more Nigerians buy cars, or travel on planes for the first time as incomes rise.

While the contribution of refining to economic activity is low for now, there are some encouraging signs in the horizon.

Dangote’s new $9 billion petroleum refinery will help spike the refining capacity of the country, reduce the reliance on imported fuel and possibly save government money in terms of subsidy payment and forex reserves.

Oil refining contribution based on the rebased 2013 GDP figures was N378.89 billion which is 0.471 percent of the total estimate.