A renowned global investor and former chairman of the asset management division of Goldman Sachs Group, Dr. Jim. O’Neill has advised investors not to be distracted, insisting that Nigeria has a lot of lucrative investment opportunities.The economist is famous for coining the BRIC and MINT acronyms, with both terms referring to large and fast-growing groupings of emerging market countries.
In order to demonstrate his confidence in the Nigerian economy, O’Neill disclosed that he recently increased his personal investment in a Nigerian mobile payment firm, Pagatech. According to O’Neill, the deliberate efforts by the Goodluck Jonathan administration to encourage entrepreneurs would go a long way in supporting the country’s economic growth.
He also reiterated that Nigeria’s macro economic policies have been in the right direction.According to O’Neill, “I think Nigeria should be included in the G-20, South Africa is in the G-20, whereas Nigeria is bigger.”However, he advised Nigeria and other oil producing countries to use the opportunity of falling crude oil prices to diversify their economies.
According to O’Neill, falling crude oil prices would test the flexibility of the Nigerian economy. O’Neill concluded by noting, “it is very dangerous for oil producing countries to just depend on oil: In some way, declining oil prices is an important test of Nigeria’s economic resilience.”
WORLD BANK FORECASTS 4.6% GROWTH FOR NIGERIA, OTHERS
The World Bank Group has predicted that growth in Nigeria and other countries in Africa will remain flat at 4.6 percent in 2015. The multilateral group hinged this prediction on the lower commodity prices.According to the World Bank, the continent’s growth would rise gradually to 5.1% by 2017, supported by infrastructure investment, increased agricultural production and buoyant services.
It noted that following a disappointing 2014, developing countries would see an uptick in growth this year, boosted in part by soft oil prices, a stronger US economy, continued low global interest rates and receding domestic headwinds in several large emerging markets.
Commenting on the outlook, the President of the World Bank Group, Jim Yong Kim said: In this uncertain economic environment, developing countries need to judiciously deploy their resources to support social programs with a laser-like focus on the poor and undertake structural reforms that invest in people.
“It’s also critical for countries to removes any unnecessary road blocks for private sector investments. The private sector is by far the greatest source of jobs and that can lift hundreds of millions of people out of poverty. On his part, the World Bank Chief economist and Senior Vice President, Kaushik Basu said: “Worryingly, the stalled recovery in some high-income economies and even middle-income countries may be a symptom of deeper structural malaise.
“As population growth has slowed in many countries, the pool of younger workers is smaller, putting strains on productivity. But there are some silver-linings behind the clouds. The low oil price, which is expected to persist through 2015, is lowing inflation worldwide and is likely to delay interest rate hike in rich countries.”
However, it noted that the sustained low oil prices would weaken activity in exporting countries.
CRUDE OIL CRASH, FEDERAL GOVERNMENT FINDS
13 ALTERNATIVE REVENUE TO OIL-DR. AGANGA
The Federal Government has marked out 13 National Strategic Export products meant to replace the petroleum products which price has continued to tumble in the International Market, threatening the stability of the country’s economy.This is part of the spirited moves by the government towards reviving the dwindling national economy with emphasis on rapid growth of the non-oil sector for exports.
While unveiling plans by the Federal Government for diversifying the economy, the Minister of Industry, Trade and Investment, Dr. Olusegun Aganga listed the 13 national Strategic Exports Products (NSEP) in three categories as follows:
Agro Industrial—Palm oil, Cocoa, Cashew, Sugar and Rice;
Mining related—Cement, Iron ore/metals
Auto parts/car, Aluminum and oil
Gas Industrial products-Petroleum products,
Fertilizer/urea, petrochemical and methanol.
Dr. Aganga therefore charged the Nigeria Export Promotion Council (NEPC) to deploy its capacity to kick-start the diversification of the country’s economy in line with the government’s agenda. The Minister urged NEPC to identify products that are being imported by the country from other exporting nations and to develop the products with sound logistics built around them.
The essence, the Minister stressed is to deliver the products cheaper to the neighboring countries with the strategy as an export oriented investment one. The new strategic focus is not just Agriculture but also commodities- based industrialization. This will help our economy to diversify faster and sustainably. Such strategy will help build an industrial sector that can diversify our economy in just a few years.
Dr. Aganga tasks Mr. Segun Awolowo, the Executive Director of NEPC on the need to work towards earning big income for Nigeria by focusing on products and services that will yield quick results in a few years. Responding, the Executive Director, NEPC thanked the Minister for the visit to his office and the support to the Council’s activities and projects.
He noted that NEPC under his leadership had long recognized the need to develop the non-oil export sub-sector and had, in the process, held series of strategic meetings with stakeholders for the development of ideas aimed at improving the Foreign Exchange earnings by the country through different avenues.
He enumerated some of the strategies to be the development of a four year strategic plan, One State One Product (OSOP), Nigerian Diaspora Export Program (NDEX) and the development of new workers for new products. Awolowo assured the Minister that he would do his best in collaborating with other stakeholders to ensure increased Foreign Exchange earnings by Nigeria with a view to reducing the effects of the current fall in oil prices at the international markets.
FEDERAL GOVERNMENT TARGETS 2018 TO END
IMPORTATION OF PETROLEUM PRODUCTS
The Federal Government has stated that Nigeria will stop the importation of petrochemical products into the country by 2018. The Minister of Industry, Trade and Investment, Dr. Olusegun Aganga, explained that with the Nigerian Industrial Revolution Plan (NIRP) launched by President Goodluck Jonathan, the importation of petrochemical products which currently costs the nation about $10 billion annually will be a thing of the past.
“If the investment goes according to plan by 2018, we will no longer import petroleum products into the country and will save us a minimum of about $10 billion. We spent about $3 billion importing steel, $6 billion importing cars and spare parts and $1.7 billion importing sugar where we can grow sugar cane. Under the NIRP, the government’s approach is to diversify the nation’s revenue sources to boost economic growth.
In his words; “Today, the falling oil price, devaluation of the Naira has gotten Nigerians all surprised because for decades, we have adopted the wrong policies. But for the first time in the history of this nation, we have a robust and comprehensive plan which we started implementing in 2012 to diversify the economy based on areas where we have a comparative advantage.”
He further said that this administration has always been about value addition based on a blue-print using local content which had attracted about $14 billion in the petrochemical sector. He also noted that the present administration’s approach is to move towards import substitution, stressing that Nigeria as a nation can no longer afford to remain import dependent.
“If we do not address this in the coming years, we will be in a very big trouble in terms of our economic development” he warned. In his own contribution, Chairman Mikano, International Limited, Mr. Mofid Karameh-said that over the past years, industrial development has been neglected but stressed that the industrial sector has began to experience some improvements especially concrete support from the Federal Government in duties and patronage.
He stated that when his company started, they were using 10% of local contents, but has now shot up its operations using about 40%. Looking forward, he stressed that Mikano is planning to establish an assembly plant which will go into full manufacturing of transformers in Nigeria, noting that the country imports about $2.5 billion worth of electrical components with transformers gulping about $1.2 billion.