Why South-South needs to develop non-oil resources, by NEXIM Bank
With the huge crude oil deposits in the South South geopolitical zone of the country, one would have thought that by now the zone would been ranking among advanced cities in the world, in terms of infrastructural development and impressive gross domestic product (GDP).
The oil-rich zone is truly not where it should be in overall development because of the dependence on oil revenue, which is also the mainstay of the Nigerian economy.
However, the over dependence on crude dollar has made the zone to neglect its abundant non-oil resources, which could boost its export products and earnings beyond oil.
The neglect has also made NEXIM Bank to organise an Exporter Enlightenment Forum for the South-South Geopolitical Zone, to enable the bank point to the stakeholders in India the zone, the non-oil resources that are viable export products if developed.
At the forum, which held in Asaba, Delta State, from January 28-30, 2020, Abba Bello, managing director/CEO, NEXIM Bank, explained that apart from crude oil, the zone is also rich in other resources such as agricultural products, solid minerals, manufacturing and services, particularly hospitality and tourism.
According to Bello, the forum, which held on the theme,”Maximizing Export Potentials in the South-South Region for Economic Growth’, brings to fore the viability of the non-oil resources across the zone, while attracting investment needed to develop them and accelerate the growth and development of the zone at the long run.
For Bello, sustained investments in the non-oil sector in the region would help in reducing the country’s over dependence on the crude oil sector, which currently contributes about 70 percent of government revenues and 95 percent of export revenues.
Hence, he urged the zone to seek right collaborations to harness the resources and accelerate its development.
Explaining further on the reason to develop the resources, the NEXIM Bank CEO, said, “While the recent episode of oil price slump, which triggered economic recession in Nigeria from 2016 to 2017 is still fresh in our memory, unfolding developments suggest that our country may once again be faced with oil revenue volatility in the current year, given the outbreak of coronavirus in China and trade war between major global players is expected to impact
negatively on global oil demand, amongst other factors”.
Considering the volatility in the global oil market, the NEXIM Bank boss suggested that Nigeria, especially the South-South region should seek to explore other untapped resources such as solid minerals, which are spread across the region in commercial quantities, as well as, improve on the phenomenal growth in the service sector over the years, among other sectors in order to create a well-diversified economy that would be resilient in the wake of global economic shocks.
As expected, most of the exporters noted that funds have been one of their major challenges in fully harnessing the non-oil resources in the zone. But Bello said NEXIM Bank is offering the exporters help through the bank’s State Export Development Programme, which earmarked at least N1 billion per state towards promoting regional industrialisation and economic diversification at the state levels.
With the combined strength of the states in the zone, he noted that there is enough funding from the export development programme.
“While the fund is targeted at supporting export oriented projects that are promoted by the private sector, the state governments are expected to play catalytic roles, through provision of land, issuance of necessary permits and other incentives as may be required”, he said.
Another incentive to aid exporters in the region to boost their business, according to Bello, is the regional Sealink project, under which the Bank is facilitating the establishment of a regional shipping company through a Public Private Partnership (PPP) arrangement, to promote trade, as well as, mitigate the transport and logistics challenges that have increased the cost of trade in the regional market.
“Of recent we also signed a tripartite MOU between us, the Sealink company and NIWA (Nigerian Inland Waterways Authority) towards the operation of the sealink in the Nigerian inland waterways to facilitate movement of bulk cargo, particularly in the solid minerals sector, thus unlocking the opportunities in the sector and enhancing the contributions of solid minerals to export revenues by at least US$1billion, annually”, he disclosed.
The NEXIM boss said that other incentives include the NEXIM partnership with Afreximbank to implement the Nigeria African Trade and Investment Promotion Programme (NATIPP), for which US$1 billion has been earmarked to support the growth of trade between Nigeria and other African countries, within the context of deepening intra-regional trade as well as promote investment activities within the African region.
Again, the African Continental Free Trade Area (AfCFTA), is another incentive and enabler, which exporters in the zone should take advantage of. He assured that exported can boost their earnings by engaging in West African and continental trades, especially now
that AfCFTA sets to take off in July this year.
“The free trade area, which creates a single market of about 1.2billion people and a combined GDP of about $3.5trillion will provide enormous trading opportunities for our SMEs and position Nigeria to attract investments, particularly within the context of the regional and global value chains. I will therefore expect every state here present to use the opportunity of this event to highlight their economic potentials towards attracting investments, particularly into the non-oil export sectors”, he urged.
Also, in line with its strategic plan for 2018-2022, the bank, according to him, has also allocated at least 60 percent of its intervention to support intra-African trade and promoting several key initiatives targeted at facilitating regional trade.
Having seen the efforts and readiness of NEXIM Bank at helping South South zone to develop its non-oil resources, Ifeanyi Okowa, governor of Delta State, urged exporters across the zone to wake up to the reality of volatility of oil and seek alternative earnings through development and export of other resources.
“Oil is a depleting resource and, even more importantly, the advent of electric cars is a clear and present danger to the future of this industry. Hence, the urgent need for the governments in the Niger Delta region to expeditiously diversify the economy and maximise our non-oil export potentials for accelerated economic development”, Governor Okowa said.
He committed to collaborating with all stakeholders to ensure improve earnings from non-oil resources, noting that there are efforts at improving four seaports in Warri, Burutu, Sapele and Koko, which combined capacity exceeds that of all the other ports in Nigeria put together.
Other states, participants and agencies also benefited at the forum, especially taking advantage of the incentives NEXIM Bank is providing.